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S-Bank raises economic forecast, warns consumers to brace for rate hikes

Another major Finnish bank has raised its forecast for the nation’s economic growth.

S-Pankin logo.
Owned by retail giant S-Group, S-Bank is one of Finland's largest financial institutions. Image: Ismo Pekkarinen / AOP

On Tuesday, S-Bank upgraded its prognosis for this year’s growth to 3.2 percent, up from its earlier forecast of three percent. Next year, the bank predicts that growth will slow to 2.8 percent.

Last week, Aktia Bank was more cautious, upping its growth estimate for this year to 3.1 percent, slowing to 2.6 percent next year.

According to S-Bank, Finland’s economy is now getting a boost from strong exports and a rise in private consumption. Household spending is being accelerated by wage increases, improved employment and low inflation, the bank says. The ‘supermarket bank’ is owned by the largest retail conglomerate, the S-Group.

Interest rate hikes on horizon

S-Bank’s chief economist Timo Vesala says that households in Finland should gradually begin to prepare for a rise in interest rates. 

Interviewed on Yle TV1 on Tuesday, Vesala noted that monetary policies are already being tightened up outside of Europe. He said this means that people in Finland should next year evaluate how an interest rate rise will affect their household finances.

For instance, he suggested that it may be a good idea to work toward paying off housing loans while interest rates remain low.

He was speaking on the day when some 3.5 million people in the country received tax refunds in their bank accounts. The average refund was around 700 euros.

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