Finland’s economic growth in 2022 was interrupted in the third quarter with a small decline in real GDP. Against the backdrop of Russia’s war of aggression against Ukraine, high inflation and rising interest rates dented consumption after a very strong performance in the second quarter of 2022. Exports of goods remained relatively robust despite the decline in trade with Russia, but export growth was outpaced by imports, thus contributing negatively to GDP growth. Investment and government consumption continued to support growth and unemployment declined further in the fourth quarter of 2022. Overall, real GDP growth in 2022 is estimated at around 2%.
Real GDP growth is forecast to decelerate to 0.2% in 2023 and then pick up to 1.4% in 2024. In 2023, private consumption and investment are forecast to stay subdued, while exports are expected to remain resilient. Gradually recovering domestic demand is projected to support the economy towards the end of the forecast horizon.
Annual HICP inflation reached 7.2% in 2022 and peaked in the last quarter. Declining energy prices are set to put downward pressure on headline inflation going forward. However, core inflation will remain relatively high due to generalised price increases across different categories of goods and services, as well as to wage pressures in the economy. Overall, HICP inflation is projected to stand at around 4% in 2023 and fall back to approximately 2% in 2024.