A recent market forecast was more dismal than earlier ones; Finland’s economy is expected to shrink 6.3 percent this year and grow by merely 2.8 percent next year.
Next year, Finland’s economic growth will be the slowest in the EU, according to an EU Commission economic forecast.
The Finnish economy is expected to shrink 6.3 percent this year and grow by just 2.8 percent next year, trailing the rest of the union. According to the Commission, economic growth in Finland will largely depend on domestic demand and could be impeded by rising unemployment. Finland’s economic growth may pick up if its trading partners recover from the crisis faster than expected.
Finland’s neighbour Sweden is also among the worst performers, despite their different approaches to COVID-19. Despite Sweden’s no-lockdown policy, its economy is expected to shrink by 5.3 percent, followed by a 3.1 percent rebound.
While the economies of many other EU countries are expected to shrink more significantly than Finland’s and Sweden’s, such as Italy (11.2 percent), Spain (10.9 percent) and France (10.6 percent), they are are expected to have a speedier recovery of 6-7 percent.
Overall, the Commission’s view of a potential economic downturn was more pessimistic than previous projections. Eurozone economies are expected to decline 8.7 percent this year, and to grow 6.1 percent next year. A previous forecast published in May envisaged a 7.7 percent slump.
The spring forecast already predicts that Finland’s economic growth in 2021 (estimated at 3.7 percent) would be the weakest among the EU member states, but the new numbers are even bleaker.
According to the EU Commission’s executive vice president Valdis Dombrovskis, the economic impact of the measures to limit the coronavirus pandemic and the slow rollback of restrictions has been more severe than expected, according to him.
“We are still sailing in stormy waters and we are facing many risks, including a significant new wave of infection,” Dombrovskis said, as quoted by Finnish national broadcaster Yle.
Nevertheless, preliminary figures for May and June suggest that the worst is over and an economic recovery is expected to accelerate towards the end of the year, according to the Commission. However, Dombrovskis warned about uneven recovery across the bloc.