Govt forecasts slower economic growth in 2019

Finland’s economic growth will slow down significantly this year after the recent upswing, according the forecast of the Ministry of Finance published on Thursday.

The country´s economy will grow by 1.7 % in 2019 and will slow down in the next few years to an annual rate of below 1½%, said an official press release.

Economic growth will be constrained by the international environment, which has become more challenging. In the medium term, 2022–2023, economic growth will fall below 1%.

“Finland’s economy is pushing forward in the wake of the economic upswing. Growth is slowing down and many see the signs of recession in the global economy. Conditions for strengthening public finances are demanding,” said Mikko Spolander, Director General of the Economics Department.

A key risk for European economic development is Brexit without a deal. Its impact on trade between Britain and the EU would be considerable in the short term. It is to be expected, however, that trade would recover before too long. The risk associated with Italy’s economic policy also remains significant.

The continued rapid growth of private consumption will support GDP growth in the outlook period. The realisation of external risks would reduce companies’ confidence domestically, adversely affect investment and employment, and undermine household confidence in the steady and favourable development of the economy. In that case, the low savings rate of households would begin to rise sharply and both private consumption and GDP growth would decline abruptly. A higher level of indebtedness would make it more difficult for households to keep their consumption levels unchanged during the downturn.