Economic growth to slow, inflation to accelerate in Finland

THE GROWTH of the Finnish economy will slow down and the rise in consumer prices pick up more than anticipated, according to the Ministry of Finance.

The Ministry of Finance on Friday published its latest economic forecast, stating that the national economy will expand by 1.4 per cent in 2022 and 1.1 per cent in 2023. Inflation, meanwhile, is to land at an average of 5.8 per cent this year as measured by the national consumer price index.

“Lifting the economy on to a more favourable and ecologically sustainable growth track that strengthens public finances requires the ability to compete successfully for investments among our peers,” commented Mikko Spolander, the director of the economics department at the Ministry of Finance.

The economic outlook is clouded particularly by the war of aggression waged in Ukraine by Russia. The war dragging on will increase the risk of two successive quarters of negative growth – that is, a recession – in Finland.

The sharp increases in consumer prices caused in part by the war can inhibit household consumption, thus eroding the economic outlook further.

Inflation is also putting pressure on pay increases.

“The consequences of the municipal sector wage programme for the future pay settlements of other sectors are difficult to estimate, and there are risks in both directions. A price-wage spiral in an economy is a self-sustaining and longer-term phenomenon that puts the brake on economic growth,” the…