Economic Survey, Summer 2019

Over the next few years, the Finnish economy will grow at a more moderate rate than in recent years. Slower growth in world trade will be reflected in Finnish export growth during the forecast period. Finland’s general government budgetary position will strengthen next year but will gradually weaken after that. The general government debt to GDP ratio will also start increasing again in the early years of the 2020s.

The summer 2019 macroeconomic forecast prepared by the Ministry of Finance does not include the economic policy measures for the period 2020-2023 outlined in the Government Programme of Prime Minister Rinne’s Government.

Finland’s GDP is expected to grow by 1.6% in 2019. Even though the outlook for exports and the world economy is now more subdued, there will not be any substantial weakening in the outlook for Finland’s export industries in the early part of the forecast period. The growth of private investments is expected to decelerate while public investments will continue to grow. The outlook for production investments is bright. Private consumption growth is supported by higher earnings and a higher employment rate. Household disposable income will continue to grow at a rapid rate.

In 2020, GDP will grow by 1.2 %. A slowdown in economic growth and a rise in nominal wages will gradually weaken employment growth. Further decline in the working-age population will push the employment rate to 73.5% by 2021. However, economic growth alone will not push the employment rate to 75% without significant additional measures. In 2021, economic growth will slow down to 1.1%.

As unemployment is falling and the mismatch between labour supply and demand is increasing, the rate of growth in earnings is expected to approach the annual rate of three per cent, the average for the past 19 years.