OECD Economic Outlook May 2019, Country Notes: Finland

Page 1

132 

Finland The economy is projected to expand at a slower pace of around 1½ per cent in 2019-20, as export growth will weaken due to lower foreign demand growth, especially for investment goods. Residential investment will remain weak. Earnings and employment growth will support private consumption, even though gradually rising inflation is set to erode household real incomes. Employment growth will slow, as labour market mismatch binds. Strong growth, rising employment and fiscal consolidation measures have reduced government debt. However, population ageing will continue to weigh on public finances and potential growth. Raising the employment rate to the level of other Nordic countries through enhancing skills and strengthening active labour market policies is key to addressing long-term fiscal challenges. GDP growth is slowing Residential investment growth has declined considerably from record levels. Business and consumer confidence have fallen, but are still close to their long-term averages. Export growth is sluggish, as global trade tensions weigh on foreign demand, while strong domestic demand pushes up imports. The unemployment rate has fallen to its lowest level since 2011, thanks to robust output growth, wage moderation resulting from the Competitiveness Pact and activation measures. Nevertheless, structural unemployment remains relatively high due to labour market rigidities and skills mismatches. The tightening labour market is starting to push up wages, which should gradually lift inflation from its currently low level.

Finland Residential investment growth is slowing

Structural unemployment is relatively high 2018

Y-o-y % changes 18

% of labour force 10

12 8

6 0

6

-6

0

0 4

-12 -18

Housing permits¹

-30

2

Real residential investment

-24 2013

2015

2017

2019

Other Nordics

OECD

Finland

Euro area

0

1. Year-on-year percentage changes of 3-month cumulated flows. Source: OECD Economic Outlook 105 database; and Statistics Finland. StatLink 2 https://doi.org/10.1787/888933934337

OECD ECONOMIC OUTLOOK, VOLUME 2019 ISSUE 1: PRELIMINARY VERSION © OECD 2019


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.