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BoF forecasts grow darker as war continues

The Bank of Finland has lowered its growth forecast for this year.

Suomen pankki- teksti seinässä.
The Bank of Finland has downgraded its growth forecast for 2022. Image: Matti Myller / Yle
Yle News

Finland's economy is set to grow by 0.5-2 percent in 2022, according to revised forecasts from the Bank of Finland.

The central bank had previously predicted growth of 2.6 percent this year. On Thursday, the bank said that the war in Ukraine would have far-reaching impacts on politics and economics across the continent.

“An enormous human tragedy and humanitarian disaster is under way in Ukraine. It is paramount now that the people of Ukraine be supported and helped," said Olli Rehn, the bank's governor, in a press release.

"Europe has demonstrated its unity, also by rapidly imposing economic sanctions on Russia at an unprecedented level. The war will compel Europe and Finland to reshape their economies and to intensify economic and security policy cooperation."

Because of the uncertainty caused by the war, the central bank produced two separate forecasts. The first sees impacts on growth and inflation limited to 2022, with growth at two percent.

The second forecast shows exports weakening more, and the cost of raw materials and energy remaining higher for longer. In both calculations, inflation is expected to increase to 4-5 percent this year, mainly because of the cost of energy and raw materials.

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