For households with outstanding loans, interest payments are now taking a larger slice of their income. Savings and a strong labour market have helped households cope with the rise in the cost of living.
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Over recent decades, Finnish households have constantly accumulated debt in relation to their income. The household DTI ratio is projected to stabilise in the immediate years ahead as the growth in the housing loan stock abates.
In the absence of supply bottlenecks, Finland’s GDP would grow 0.5 of a percentage point faster in 2021. We assume the supply-side disruptions will be smoothed out after 2022, and will not leave long-term scars on the economy.
Consumer confidence has long been depressed by weak assessments of the outlook for the Finnish economy. Changes in consumer confidence can foreshadow a turning point in the economy and they therefore attract close attention.
Global uncertainties are weakening investment growth in Finland. A similar effect is being exerted by structural factors in the domestic economy.
The pace of labour productivity growth in Finland has faded. This is attributable to lacklustre productivity development in manufacturing as well as the increasing dominance of services in the economy.
Finns have consumed at levels above their incomes, accumulating more debt than new wealth. Household saving is nevertheless similar to that of the other Nordic countries.