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Economy and Finance

Economic forecast for Finland

The latest macroeconomic forecast for Finland. 

Indicators 2023 2024 2025
GDP growth (%. yoy) -0.4 0.6 1.6
Inflation (%. yoy) 4.3 1.4 1.5

Finland’s economy is estimated to have contracted by approximately half a percent in 2023. Private consumption started declining already in the second quarter, while higher interest rates and input costs weighed on investment, especially construction. By contrast, general government consumption increased and net exports are projected to have had a positive contribution to growth, as the decline in imports more than offset the fall in exports. Subdued import demand can be explained by lower domestic demand and previously accumulated large stock of inventories.

The start of this year is marked by weak business and consumer sentiment, and growth in the first quarter of 2024 is forecast to be sluggish. However, the projected fall in inflation, rising wages and income tax cuts that took effect at the start of the year are set to support consumers’ purchasing power. Together with more favourable financing conditions and a relatively stable labour market situation, this is expected to pave the way for a recovery in the second half of the year. Hence, private consumption is forecast to be the main growth driver this year, followed by exports. Domestic demand is set to strengthen further in 2025, when investment growth is expected to pick up on the back of a reviving construction sector. Overall, real GDP growth is projected at 0.6% in 2024 and to accelerate to 1.6% in 2025. Compared to the Autumn Forecast, the projection for 2024 is revised down while 2025 remains broadly unchanged.

In 2023, HICP inflation dropped to 4.3%, from 7.2% in 2022. A decline in energy prices, especially in the last quarter of 2023, was the main factor behind easing price pressures. The continuous pass-through of falling energy prices, the tight monetary stance and weak economic growth are set to exert further downward pressure in 2024. Overall, HICP inflation is projected to fall to 1.4% in 2024, and to slightly increase to 1.5% in 2025 as economic growth is set to pick up. For both years, these forecasts have been revised down compared to autumn.