The Central Bank of Finland is lowering the country’s growth forecast for 2022
HELSINKI – The Bank of Finland (BOF) lowered its growth forecast for Finland next year to 2.6 per cent on Friday.
The central bank noted that the economy is continuing to recover from the sharp recession caused by the COVID-19 pandemic. However, the recovery is slowed by the deteriorating virus situation, the shortage of raw materials and electronic components, and the rise in the general price level.
In September, the BOF forecast growth of 2.8 percent for the country in 2022.
According to the bank, if the pandemic situation improves, the outlook could be better in the near future. Households could start consuming the savings accumulated during the pandemic and business investment could grow faster than expected.
By 2024, economic growth will slow to 1.3 per cent, as Finland’s growth opportunities are affected by an aging population and a slow pace of labor productivity growth.
The COVID-19 crisis has increased Finland’s public debt. Economic recovery will help correct the deficit. However, public finances are still in deficit at the end of the forecast period, the bank said.
Inflation in Finland will remain at 2.1 per cent this year and 2.0 per cent in 2022 and will slow to 1.6 per cent in 2023. The bank forecast that energy prices will start to fall and supply bottlenecks will ease next year.