Finland: Nordea forecasts continued slow growth

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Nordea’s Economic Outlook, which was published on Wednesday, makes for grim reading for the government, for companies and for consumers in Finland. (Jorma Vihtonen / Yle)
Nordea’s Economic Outlook, which was published on Wednesday, makes for grim reading for the government, for companies and for consumers in Finland. (Jorma Vihtonen / Yle)
Banking group Nordea released its Economic Outlook on Wednesday, forecasting continued slow growth worldwide.

The bank sees poor growth and additional cuts in public spending on the agenda for Finland.

Nordea’s Economic Outlook, which was published on Wednesday, makes for grim reading for the government, for companies and for consumers in Finland.

The bank says that Finland’s economic growth last year was based on consumption rather than exports, and that attempts at structural reform have so far failed and therefore an economic revival based on exports is unlikely.

Prime Minister Juha Sipilä had launched a so-called ‘social contract’ to try and remedy Finland’s competitiveness problem, but that is insufficient, according to Nordea’s chief economist Aki Kangasharju.

“There’s no sense in hankering after leaving the euro either, because the long resignation process brings uncertainty,” said Kangasharju. “A better option is to continue reforms as a euro member despite all the difficulties.”

Slow growth

Finland saw economic growth of 0.5 percent last year to emerge from several years of a contracting economy, but Nordea reckons that was down to private households’ consumption—and there’ll be similarly slim growth in 2016.

Several banks offered mortgage customers a break from repaying their loans at no cost, with OP justifying the move by explicitly citing the possible stimulus to the economy. Those offers are no longer available, and there’s no other boost to spending power in the offing.

The bank is therefore forecasting growth of just 0.5 percent this year and less than a percentage point in 2017. Kangasharju says that Finland can expect more cuts in public spending this year.

“Because the older cuts have not been made, and last year’s growth was slower than the Finance Ministry forecast, we can’t avoid additional cuts this year,” said Kangasharju.

Related stories from around the North:

Canada: How biz initiative by Canada went from blasted by critics to praised by politicos, Eye on the Arctic

Finland: Finnish GDP up 0.5 percent in 2015, Yle News

Norway: Stop romanticizing Arctic development say indigenous leaders, Eye on the Arctic

Russia:  Arctic shipping: The myths, the realities & the challenges ahead, Eye on the Arctic

Sweden:  Wind power investments down in Sweden, Radio Sweden

United States: Native corporations Alaska’s new wildcatters, Alaska Dispatch News

 

 

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