Finland’s Finance Ministry predicts sluggish recovery from pandemic

Mikko Spolander, Director General of the Economics Department at Finland’s Ministry of Finance. (Martti Kainulainen/Lehtikuva/Reuters)
State number crunchers forecast a six-percent slump this year – but Finland’s economy will slowly recover towards the end of this year, the Ministry of Finance said on Tuesday.

For next year, it forecasts GDP growth of 2.5 percent, followed by 1.7 percent in 2022.

The gradual lifting of coronavirus restrictions is primarily spurring the service sector, it says.

Overall consumption will be down this year, but in first half of next year consumption of goods and most services are expected to return to normal. Travel-related services will recover more slowly, according to the ministry.

Second wave unlikely
“The financial support for businesses and for employment and economic activity will get us through the crisis, but this support also weakens public finances considerably. Besides recovery and rebuilding, we need to decide soon on measures to stabilise the long-term management of public finances.”Mikko Spolander, head of the ministry's economics department

The ministry expects exports to begin to rise again in the second half of the year.

It does not expect a significant second wave of the coronavirus pandemic next autumn, but says that consumer confidence and overall functioning of the economy will remain shaky until there is an effective treatment or vaccine for Covid-19.

Joblessness to climb

The ministry says Finland should brace for a steep decline in employment this year, with the employment rate sinking by 2.5 percent to below 71 percent. It projects that the unemployment rate for 2020 will rise to 8.5 percent, up from 6.5 percent last year. That figure was near the historical low and had been on track to fall further this year before the corona crisis hit Finland.

Also on Tuesday, the official statistics bureau reported that output fell by almost eight percent in April compared to a year earlier, and by more than two percent, seasonally adjusted, from the month before.

In March, even as the pandemic spread into Finland, output rose by 5.7 percent compared to a year earlier.

Related stories from around the North:

Canada: Nunavut businesses, private sector struggle to find space in closed economy, CBC News

Finland: Finland eases curbs on cross-border travel, public events, Yle News

Greenland/Denmark: Inuit in Canada, Alaska and Greenland found international business association, Eye on the Arctic

Iceland: Iceland offers COVID-19 testing to international travellers starting June 15, Eye on the Arctic

Norway: Entire season in jeopardy for Svalbard expedition cruising, The Independent Barents Observer

Russia: All Russia’s North Pole cruises rescheduled to 2021, The Independent Barents Observer

Sweden: Extra billions to SAS – but with stricter climate requirements, Radio Sweden

United States: Airline shutdown creates new challenges for rural Alaska, The Associated Press

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