Alternative scenario: Core inflation could be higher than anticipated in the immediate years ahead
A wage-price spiral may occur in which prices and wages rise and ultimately GDP growth slows down.
A wage-price spiral may occur in which prices and wages rise and ultimately GDP growth slows down.
Companies do not appear to have sought to benefit from high inflation by increasing their prices and boosting profits.
Finland’s cost competitiveness has strengthened in recent years, but it has yet to fully recover to the level attained before the financial crisis. Improving cost competitiveness is especially important now, when companies are searching for new markets to replace lost trade with Russia.
In the Bank of Finland forecast, the COVID-19 crisis is not expected to cause such a deep recession as experienced in the financial crisis, and recovery will be faster. The virus could, however, leave long-term scars on e.g. employment, the capital stock and productivity.