Research Institute Almost Halves Economic Forecast For Finland.
-
Loading... - Gretel Meier
- 19 Apr 2022
- 317 Views
- 1 Like
- 0 Comment
THE Labour Institute for Economic Research (Labore) has slashed its growth forecast for this year due to the war waged in Ukraine by Russia.
Labore revealed last week that it expects the Finnish economy to grow by 1.8 per cent in 2022, at roughly half the pace of its forecast from last autumn. The growth is expected to continue languid in the next two years, amounting to 1.5 per cent in 2023 and 1.4 per cent in 2024.
The Finnish economy will be affected adversely, both directly and indirectly, by western sanctions and general unwillingness to collaborate with Russia, according to Sakari Lähdemäki, the director of forecasting at Labore.
“Directly through the drying up of Russian trade and indirectly due to eroding economic outlook across Europe.”
“Finnish economic growth is being sustained by private consumption and investment. The employment situation will continue to develop positively but slightly slower than earlier and earnings will increase reasonably over the forecast period,” he added.
Labore indicated that its forecast is founded on four key assumptions: Finland succeeding in finding new export and import markets that offset most of its trade with Russia, the war not spreading beyond Ukraine, the sanctions remaining in place throughout the forecast period and the dramatic slowdown in trade with Russia being long term.
Private consumption, it said, is forecast to increase this year in spite of rapid inflation, as the coronavirus pandemic has left households with considerable savings. The pandemic is not expected to have a major impact on consumption in the latter parts of the year, and households will start to dig into their savings.
Also the employment situation will improve further, fuelling consumption.
Labore estimated that the eurozone will continue to grow at a solid pace this year and at a relatively solid pace next year despite the adverse effects of the war in Ukraine. Additional EU sanctions on, for example, oil and natural gas would undermine the forecast for the currency union particularly in the event that the sanctions are kept in place for a long time. Read More...
