Economic Survey, Spring 2015
The Finnish economy is facing severe difficulties. The current downturn has persisted for a long time, and there
are no signs of a quick or significant turnaround. The picture of the global economy has recently been mixed.
In the Russian economy, growth prospects have long been bleak. On the other hand, the economies of many of
Finland’s major trading partners have developed favourably. Moderate economic growth has also got under way
in the euro area, although there are marked country differences.
Finland’s GDP growth forecast for 2015 is 0.5%. Exports are projected to increase by 1.5%, while imports
growth will reach just 1% because of sluggish domestic demand. Private consumption will rise by 0.5% this year.
Private investment will fall by 1%, which is mainly attributable to weak investment in building construction. The
unemployment rate will edge up to 8.8% this year. The number of employed persons will rise somewhat, but that
is explained in significant part by the increased availability of work for older age groups. Inflation will come in at
just 0.3%, in large part in response to the effect of tax hikes.
In 2016, GDP growth will pick up to 1.4%. Growth will become more broadly-based as all demand items
will have a positive impact on economic growth. Exports will be up by 3% from the year before, but rebounding
domestic demand will drive imports to almost the same rate. Private investment will accelerate to 4.5%, and
private consumption is expected to increase by 0.8%. The projected unemployment rate for 2016 is 8.6%. Inflation
will pick up modestly, but the annual rate of increase in prices will still remain well below 2%.
The projected GDP growth rate for 2017 is 1.5%. Growth will be driven by domestic demand, with net
exports having only very limited effect. Over the outlook period the Finnish economy will grow slightly faster
than potential output, and therefore the negative output gap will shrink.
As far as the international economy is concerned, the risks to the forecast remain skewed to the downside.
Domestically, the risks still come from the development of the real economy. An improvement in public finances
is only possible under conditions of favourable real economic development. The projected economic scenario will
not alone be enough to significantly improve the health of public finances in Finland.
In 2014 the general government deficit exceeded the 3% threshold of the EU Stability and Growth Pact, and
the deficit will remain over 3% in 2015 as well. The 60% debt-to-GDP limit will also be breached. The deep deficit
is due first and foremost to the long-standing downturn. Economic growth will remain subdued over the next few
years, and it will not alone be enough to correct the imbalance in public finances. The general government fiscal
position is furthermore weighed down by expenditure resulting from population ageing. However, the deficit will
shrink with rebounding economic growth.
Economic Survey, Spring 2015
02.04.2015Economic Prospects economyeconomic phenomenaforecasts
