Finland

Finland: still under pressure

Following strong economic performance earlier, Finland has suffered a unique confluence of cyclical and structural shocks since the global financial crisis in 2008. The EPI grades Finland’s current economic performance at C level, with the EPI score projected to be close to 87.3% in 2016.

Weak external demand and the parallel declines of Nokia and the paper industry have reduced exports, moreover, the recession in Russia has taken a further toll on exports.

GDP is projected to increase 0.4% in 2015, partly driven by higher private consumption growth as lower inflation and “mortgage amortization holidays” offered by major banks to households. The unemployment level increased to 9.5% in 2015 from 8.7% the year before. The government is providing some fiscal stimulus and kept the budget deficit at 3.2% in 2015. Inflation remains at zero, driven by low commodity prices and disinflationary environment in Europe.

The 5-Minute Economist projects Finland’s EPI score to improve only gradually in the to 90.7%, or a B- level, by 2020, driven by economic growth acceleration and lower unemployment rate, despite a gradual pick-up in inflation.