Economic Survey, winter 2015

The Finnish GDP growth forecast for 2015 is just 0.2%. In 2016 and 2017, it is predicted that GDP growth will pick up to 1.2%.

The growth oong-term and structural unemployment presents a very serious concern. In October a total of 113,000 people had been out of work for more than a year, almost 20,000 more than the year before. According to employment service statistics the number of structurally unemployed people in October stood at 206,000, again almost 20,000 more than one year earlier.

Positive private consumption trends are supported by increasing household real disposable income, which will drive private consumption to growth of 1.3% this year. Over the next two years private consumption growth will slow somewhat, mainly because of modest real income growth.

World trade growth has slowed, among other reasons because of the slowdown of Chinese manufacturing and sluggish investment activity in industrial countries. Imports growth will remain exceptionally modest, especially in emerging economies. Before the financial crisis, trade growth was around twice as high as output growth, but at the moment trade is actually growing more slowly than output.

In 2015 domestic industry value added will still decline by more than 2%, but in 2016 and 2017 it is set to rise by around 2% and 3%, respectively.

Finland’s general government deficit breached the 3% of GDP limit in 2014, and will remain over the limit in 2015, despite adjustment measures introduced by the previous and current governments. In 2016, it is expected that the budget deficit will fall below 3%. General government debt is set to exceed the 60 per cent reference level, and there is no turnaround in sight over the forecast horizon.

The main domestic risks are still related to the development of the real economy and the labour market. In the short term, it seems that Finland will see slower economic growth than its competitor countries. A robust improvement in public finances can only be achieved under conditions offavourable real economic development. It is necessary to stress that the projected economic scenario will not be enough to significantly improve the health of public finances in Finland.

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