Finland's economy returns to growth: Danske Bank

Finland's economy emerged from recession in the final quarter of 2025 and has shifted to a modest growth path, with Danske Bank forecasting a further pickup in the coming years, reported Xinhua.

In its Economic Outlook released Wednesday, Danske Bank projected Finland's gross domestic product (GDP) to expand by 1.5 percent in 2026 and 1.9 percent in 2027.

The bank said the prolonged conflict in the Middle East and disruptions in energy markets pose key risks to the forecast, though it expects any impact to be temporary.

The rebound is being supported by improving industrial orders, firmer export demand from major trading partners, and rising real wages.

Danske Bank noted that stronger industrial activity in key markets such as Germany and Sweden is bolstering demand for Finnish exports. It added that Finland's cost competitiveness, Germany's investment package and increased European defense spending also support the export outlook.

"The economic turnaround has finally begun, and growth has picked up. The outlook for industry and exports has improved, and household consumption is growing as real incomes continue to rise," Minna Kuusisto, chief economist at Danske Bank, said in the bank's press release.

Danske Bank expects productive investment to strengthen and private investment to increase, particularly in data center projects and the green transition. It cautioned, however, that low industrial capacity utilization could slow the translation of improving sentiment into concrete investments and hiring.

Unemployment remained high at 10.3 percent in January, but the bank expects it to ease gradually as activity strengthens.

Household spending is also expected to recover, supported by wage growth outpacing inflation, the bank said, while warning that deepening geopolitical tensions and uncertainty over global trade policy could push inflation higher and weigh on exports and industrial output.

"Recently, the situation in the Middle East has escalated, which has already raised oil and gas prices and may accelerate inflation. If prolonged, the energy crisis could even halt the Finnish economy's just-started growth," Kuusisto said.

According to Statistics Finland data released earlier, Finland's economy expanded slightly in 2025, signaling a fragile return to growth after a period of stagnation. GDP increased by 0.2 percent for the year, while the fourth quarter posted 0.4 percent growth from the previous quarter.