Finland Headed For Recession Says Think Tank
According to the latest report from the Pellervo Think Tank (PTT), the Finnish economy is forecast to fall into recession.
The report cites rising interest rates, the collapse in construction, growing unemployment, and decreasing consumer consumption as causes for the economy to head into a recession. According to PTT, the economy will contract 0.5% this year and growth in 2024 will be 0.5%.
Weakening economic trends will result in decreasing tax income and growing social security costs. The deficit in public finances will grow due to tax cuts, increased research and development costs and rising cost of debt financing due to higher interest rates.
The jobs market will weaken with an estimated 50,000 people expected to lose their jobs and companies relying on widespread layoffs. Investments are also in decline and the construction industry in particular is in crisis.
Veera Holappa, economist at PTT, was quoted in YLE News saying: "The construction industry is threatened by a massive wave of bankruptcies and the permanent loss of the skilled foreign workers who become unemployed."
The rise in inflation has dissipated during 2023. The latest inflation figures from July showed inflation at 6.5% having come down from a high of 9.1% in December 2022. For this year, PTT expects inflation to average 5.7% and drop to 2.8% next year.