In a report published on Wednesday, the Research Institute of the Finnish Economy (ETLA) examined its own record in economic forecasting in the past four years.
ETLA came to the conclusion that in 2014-2015 it misjudged the strength of global economic recovery and therefore overestimated the growth in the Finnish economy (as measured by gross domestic product, or GDP).
In contrast, the institute admitted being too pessimistic in its estimates for 2016-2017 by emphasizing China’s stock market crash and the ensuing economic uncertainty. For example, ETLA said in March 2016 that according to its estimates Finland’s economy would grow 0.9 percent that year. In fact, the GDP increased by 2.1 percent.
ETLA said its inaccurate estimates were largely a result of poor forecasts from international organisations such as the OECD, the IMF and the European Commission. Their figures were particularly wide of the mark last year.
In addition, ETLA admitted overrating the negative effect that falling exports and the end of mobile phone production would have on the Finnish economy in 2016-2017. Finally, the institute failed to predict a steep drop in the savings rate in Finland, which helped private consumption.
The institute pointed out however that the forecasts by other Finnish organisations, such as the Bank of Finland and the Ministry of Finance were not any more accurate than ETLA’s.