Articles on the economy
The United States is planning widespread tariffs on imported goods. If implemented, these would weaken Finland’s economic growth. Even greater harm to growth would be brought by any countermeasures adopted by other countries and they mounting uncertainty over the future direction of international trade policy.
The significance of Finland’s service exports has grown rapidly. Service exports comprised about one third of the total value of exports in 2023. Finland’s service export destinations are dominated by a fairly small number of countries, the most important being the United States.
At the turning points of business cycles, economic recovery has often turned out to be faster than forecast. Growth could pick up if consumers’ confidence in the economy and in their own finances were to strengthen more than expected and exports to grow more quickly than forecast.
In Finland, variable rate mortgages are common, which to some extent is amplifying the impacts of monetary policy on economic growth and inflation. A key factor is the extent to which households have a financial margin to use as a buffer against increases in their loan servicing costs.
Russia’s war in Ukraine threatens to push Finland and the entire euro area economy into recession. Disruptions in energy availability and supply chains may turn out to be more severe than anticipated, and market rates could rise more rapidly than expected.
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.
If households spend the savings accumulated during the pandemic quickly, economic growth could be much stronger than estimated in the forecast for the Finnish economy for 2021–2023.
Abundant construction in the Helsinki metropolitan area has put a brake on apartment prices.
Exports have had a significant indirect impact on employment. The overall drop in employment has, however, remained moderate, as employment has been sustained by domestic demand.