Finland Economic Forecast

Finland Economic Outlook

September 1, 2020

The economic downturn deepened in the second quarter according to recent data, amid lower private consumption due to social distancing restrictions. However, fixed investment held up fairly well, and the contraction was far milder than the Euro area average, likely due to a less stringent lockdown and ample fiscal support. Turning to Q3, the economy is likely gaining steam. Retail sales expanded solidly in July in annual terms, hinting at healthier private consumption. Less positively, consumer confidence and broader economic sentiment ebbed in August. Meanwhile, in politics, on 12 August the finance ministry published the draft 2021 budget. Spending is seen totaling EUR 61.6 billion, down markedly from expected expenditure this year, while the fiscal deficit is projected to shrink by over half as the government looks to rein in the rapid rise in public debt.

Finland Economic Growth

This year, the economy is projected to shrink amid lower investment and a subdued external sector. However, strong government support measures should prop up activity. Potentially prolonged external sector weakness and a possible second wave of Covid-19 cases at home pose downside risks. FocusEconomics panelists project GDP to contract 5.6% in 2020, which is up 0.7 percentage points from last month’s forecast, and grow 3.5% in 2021.

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Finland Facts

Value Change Date
Bond Yield0.033.70 %Dec 30
Exchange Rate8.78-0.38 %Jan 01

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