Global Trade Tension Weighs on Finland's Economic Revival
Global Trade Tension Weighs on Finland's Economic Revival
(Bloomberg) --
The escalating trade war between the world’s major powers is clipping Finland’s economic revival, just as the Nordic country braces itself for lean years ahead to deal with the costs of a rapidly aging population.
Finland’s Finance Ministry cut its forecasts through 2021 on Monday, citing “bad economic news from elsewhere in the world.” The economy’s growth rate is now seen at 1.5% this year. It is then expected to slow to 0.9% by 2021 and remain below 1% until 2023.
| GDP growth forecast | 2019 | 2020 | 2021 |
|---|---|---|---|
| New (old) | 1.5% (1.6%) | 1% (1.2%) | 0.9% (1.1%) |
“The demand for Finnish exports will decrease sharply in 2019, primarily due to a weaker outlook in Europe,” the ministry said in a statement. “Trade tensions between the major economies will have an impact on world trade, and indirectly also on Finnish exports.”
The lower forecasts spell trouble for the government of Prime Minister Antti Rinne, which has promised to balance the budget and raise employment levels to 75% of the workforce by the end of its term, in 2023, in order to help deal with rising demands on the country’s welfare state.
Read more: Finland Is Told Higher Employment Needed to Safeguard Welfare
Sluggish growth means “there will be little improvement in employment,” officials at the ministry said. Mikko Spolander, who runs the ministry’s economics department, said policy makers could consider changes to the social security system, the housing market, regulation and taxation.
To contact the reporter on this story: Leo Laikola in Helsinki at llaikola@bloomberg.net
To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Nick Rigillo, Kati Pohjanpalo
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