Finland should sort out finances ASAP, Aktia's chief economist says

Finland's current financial situation is unsustainable, according to Heidi Schauman, Aktia Bank's chief economist.

File illustration. Image: Ismo Pekkarinen / AOP

The Finnish government should improve its public finances while the economy is in an upward swing, according to Aktia Bank's chief economist Heidi Schauman.

Schauman, who spoke in Helsinki as she presented Aktia's economic outlook on Monday, said the Finnish government should sort out its finances while the economy is still growing, saying the bank anticipates the expansion will likely taper off next year, making balancing the budget more difficult.

This autumn Finnish lawmakers will negotiate next year's budget, which was presented by the finance ministry earlier this month. The proposal includes a deficit of 1.7 billion euros, roughly the same level as last year.

The 2019 budget proposal includes 17.4 billion euros for spending programmes, 223 million more than in this year's budget.

Schauman said that the global economy will continue to expand but said there are many uncertain factors which could affect that growth, such as the ongoing trade war.

Economic outlook

Aktia said Finland's economy would grow by three percent this year, and expects growth of 2.2 percent in 2019.

The economist said matters such as Italy's economic problems, the financial and political situation in Turkey and Brexit could have negative effects on the economy.

"Finland's decision makers cannot base their outlook and policies on the idea that the strong economy will continue forever. Finland must be ready to act if any of the global economy's risk factors become realities," Schauman said.

The economist noted that while employment has increased by 100,000 people in the past year, some sectors including the service and construction industries are having a difficult time recruiting personnel.

Schauman said that the country's employment agency needs more resources. She said jobseekers need relevant employment opportunities as well as training incentives so that employers and job hunters can find each other.