Finland’s economy is facing a difficult year ahead, according to a forecast by the Mortgage Society of Finland Hypo, and is unlikely to return to growth until 2024.
The report by the home financing specialists noted that the challenges posed by Finland’s ageing population as well as rising interest rates will put further strain on public finances through to the end of 2023.
In addition, the increasing level of inflation — especially food prices — has clearly impacted the lives of consumers over the past two years, and will continue to do so in the coming months.
Despite a difficult end to the year, Hypo’s report emphasised that the Finnish economy is unlikely to dip into recession.
One bright spot on the horizon is offered by the fact that global economic growth is buoying up Finnish exports, even as rising interest rates are having a detrimental impact on both investment and private consumption.
Because of these latter two factors, Hypo noted, growth this year will be pushed into negative territory as Finland’s GDP will contract by 0.5 percent this year before growing by 1 percent next year.
The report also expects inflation to ease in the latter half of this year.
The worst is over for the housing market
In the housing market, Hypo believes that the worst is over, but the market is likely to remain quiet for a while before demand picks up again as interest rates and inflation level off.
“Demand for homes will pick up again when interest rates and inflation settle and consumer confidence improves,” the report stated.
Hypo further forecasts that real wages will improve next year as inflation slows down. Although interest expenses are now consuming a larger proportion of people’s income, a rejuvenated labour market will help to drive the economic recovery, the report predicted.
Source : YLE