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Finance Ministry bullish on economy, doubles 2017 growth forecast

Finland’s Finance Ministry has doubled its economic forecast for this year to 2.4 percent. During the spring, ministry economists projected that the economy would grow by a relatively modest 1.2 percent.

Kontteja Vuosaaren satamassa Helsingissä.
Kontteja Vuosaaren satamassa Helsingissä. Image: Anni Reenpää / Lehtikuva

The Finnish Finance Minister has doubled a previous economic growth forecast of 1.2 percent in the spring, to a projected 2.4 percent for this year.

Published on Wednesday, the forecast noted that an upswing in economic activity that set in at the beginning of the year was responsible for the improvement in the full-year growth projections.

According to the ministry however, growth will slow down after this year, with the increase economic activity expected to come in at about 1.5 percent in 2018 and 2019.

The summer survey predicts that rising employment will boost the ongoing increase in private consumption this year. Meanwhile the more private investment is moving from construction to manufacturing.

The conditions for an expansion of exports are said to be improving, buoyed by global demand for exports and enhanced cost-competitiveness in the business sector.

"After years of negative contribution, foreign trade will begin boosting GDP growth," the ministry said in a release.

In more positive news, the ministry said that the recovery has been responsible for an upturn in employment and projected that the employment rate will rise to just over 70 percent by 2019 — still short of Prime Minister Juha Sipilä’s target of 72 percent.

However the ministry warned that in spite of the positive impact on public revenues and reduced spending on unemployment, any improvement in public finances will still labour under the burden of an ageing population, "which automatically increases public spending."

"The general government deficit will therefore fall only sluggishly over the next few years," the ministry noted.

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