Economic Survey, Spring 2018

Abstract

Finland’s economic growth will continue at an annual rate exceeding 2% but slow to a rate of below 1½% over the medium term. The rapid economic recovery and sustained strength of economic growth will increase demand for labour and employment growth will be faster than seen in many years. The employment rate will climb to 72.5% in 2020. However, improvement in the unemployment situation will remain slow despite the increase in job vacancies. Finnish GDP is expected to grow by 2.6% in 2018. The growth in private consumption will accelerate as a result of the rise in employment in 2018. Export growth will slow but still outperform the growth in world trade. In 2019, economic growth is expected to slow to 2.2%. Accelerating inflation will decelerate the growth in real household disposable income and consumption. Strong growth in world trade will improve Finnish export prospects over the outlook period. In 2020, GDP will grow by 1.8%. Growth in private consumption will decelerate further, despite the sum of wages and salaries rising due to the accelerating growth of the earnings level. Export growth will continue to be driven by goods exports. The annual growth in private investments will average 3½–4%, but this growth will continue at a slower pace than in recent years. The earnings level will increase by 1.9% in 2018. Wage drifts are forecast to remain below average because of local settlements and company-specific items. The increase in the earnings level will accelerate in 2019 to 2.5% due to timing factors relating to collectively agreed pay rises. In 2020, the rise in the earnings level will accelerate to 2.8%. General government deficits will decrease, and general government finances will reach a surplus at the turn of the decade. Despite good economic growth, general government debt will continue to increase when entering the 2020s