Finland central bank upgrades growth forecast to 1.7 percent

Finland’s economy is expected to grow faster than previously forecast, driven by exports and investment, and the recovery is likely to reduce unemployment, ERR reported on Tuesday, citing the Bank of Finland.

The central bank now expects gross domestic product to grow by 1.7 percent this year and 1.6 percent in 2027. Its June forecast had put growth at 0.7 percent this year and 1.2 percent next year. The Bank of Finland also revised its estimate for last year’s growth from 0.2 percent to 0.8 percent.

“The Finnish economy performed more strongly than previously forecast in the first half of the year. Growth in exports and investment is creating the conditions for broader-based growth,” said Juuso Vanhala, the central bank’s head of forecasting.

Vanhala said Finland’s range of export products was broad and less sensitive to the current energy shock. He pointed to the global boom in artificial intelligence, which is benefiting Finnish technology companies, and European defence investments, which are supporting Finland’s defence industry. Finland’s maritime sector is also performing well, he said.

The Bank of Finland expects the unemployment rate to remain almost unchanged this year at 10.4 percent. Rising demand for labour is expected to bring it down to 9.8 percent in 2027 and 9.0 percent in 2028.

Inflation is forecast to rise to 2.4 percent this year because of higher energy prices caused by the conflict in the Middle East. The increase is expected to be temporary, with inflation falling to 1.4 percent by 2027.

Alphabet’s Google announced last week that it would invest at least 13 billion euros in artificial intelligence infrastructure in Finland over the next two years. The company described it as its largest investment in Europe.

Finland will hold parliamentary elections next year.