Finland's Economy Projected to Rebound by 2025, Says Finance Ministry

Helsinki, Dec 19 (NationPress) Finland's economy is on track for a recovery from the recent recession, with its Gross Domestic Product (GDP) expected to increase by 1.6 per cent in 2025 after a 0.3 per cent decrease in 2024, according to a statement issued on Thursday by the Finnish Ministry of Finance.

Each quarter of 2024 is anticipated to show growth compared to the previous year, the ministry reported, highlighting factors such as decreasing inflation and lower interest rates. These elements are expected to support consumption and investment next year, aiding in the gradual economic recovery.

Although the economy in 2024 is displaying more favorable signs than the previous year—when Finland's GDP fell by 1.0 per cent year-on-year—employment rates are predicted to stay weak until 2025. The ministry indicated that an increase in immigration and government initiatives aimed at enhancing labor supply are expected to gradually bolster the labor market.

Growth in consumption is anticipated to align with rises in real household income and the utilization of accumulated savings. Furthermore, investment activities may see an uptick, propelled by energy transition projects and increased defense spending, as reported by Xinhua news agency.

However, public finances are still under considerable strain. The general government deficit is projected to hit 4.2 per cent of GDP in 2024 before gradually declining to 3.5 per cent of GDP in 2025 and around two per cent in 2029.

Meanwhile, the general government debt ratio is expected to exceed 82 per cent this year and rise to 85 per cent next year. The debt-to-GDP ratio is predicted to stabilize by the end of the decade, depending on fiscal adjustments as outlined by the government.

In September, the Finnish Ministry of Finance acknowledged that while Finland is emerging from recession, the public economy is anticipated to remain in a persistent deficit.

Nonetheless, a report indicated that the country will likely avoid activating the European Commission's Excessive Deficit Procedure (EDP), a mechanism aimed at ensuring EU member states maintain fiscal discipline.

In June, Finland successfully averted the EDP after the European Commission's forecast indicated that the Finnish deficit ratio would soon fall below the three per cent threshold.

As global trade rebounds, demand for Finnish exports is predicted to rise. In addition, decreasing domestic inflation and lower interest rates are expected to enhance consumer demand and support the recovery of the construction sector.