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Central bank: Finland has pulled out of recession

"We're leaving the recession behind; Finland has moved onto a growth track," Bank of Finland Governor Erkki Liikanen tells Yle.

Erkki Liikanen
Former finance minister Erkki Liikanen was Finland's first European commissioner from 1995 to 2004. Image: Yle

The Bank of Finland says the Finnish economy is no longer in recession. The central bank declared on Tuesday that the economy has returned to growth, thanks to private consumption and investment. It forecasts slow GDP growth of 1.3 percent in 2017 and 1.2 percent the following two years.

Those figures are up slightly from its previous prognosis in June, when it projected growth of 1.1 percent next year and one percent for 2018.

Behind the eurozone curve

Finland still lags behind the other eurozone countries, though, partly because of the impact of the Russian recession and trade sanctions. The Finnish economy has been in the doldrums since the global financial crisis of 2007-08.

The central bank says growth will be fuelled by private consumption and the government's so-called competitiveness pact. But it also points to problems that will hamper the recovery, including an inability to match up and mesh jobseekers with open positions, the persistence of long-term unemployment and marginalisation among young adults.

"According to our forecast, we're now leaving the recession behind us and Finland has moved onto a growth track," Bank of Finland Governor Erkki Liikanen told Yle.

"And there is growth not only in domestic consumption but also in investments and to some degree also heavy industry. This is definitely the positive news," he added.

Hiring in services and building

The Bank of Finland expects long-sluggish Finnish exports to perk up. It attributes this to improvements Finland's competitiveness and stronger demand due to growth in export target countries.

The bank believes that the competitiveness pact pushed through by the centre-right government last June is encouraging companies to take on more staff. It adds that economic growth is concentrated in the labour-intensive services and construction branches.

Central bankers argue that the opportunities for growth should be reinforced by carrying on with structural reforms. As they see it, the most important potential for spurring productivity growth lies in overhauling and rejuvenating old companies.

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