Helsinki, Dec 19 (IANS) Finland’s economy is set to recover from the recent recession, with its Gross Domestic Product (GDP) projected to grow by 1.6 per cent in 2025 following a 0.3 per cent decline in 2024, according to a statement released Thursday by the Finnish Ministry of Finance.
Every quarter of 2024 recorded growth compared to the previous year, the ministry said, citing attributes such as slowing inflation and falling interest rates. Next year, these factors are expected to sustain consumption and investment, contributing to the gradual economic recovery.
Though the 2024 economy has shown more positive signs than last year — when Finland’s GDP contracted by 1.0 per cent year-on-year, employment rates will remain weak until 2025. Higher immigration and government measures to boost labour supply are projected to strengthen the labour market gradually, the ministry noted.
Consumption growth is projected to follow increases in real household income and the use of accumulated savings. Additionally, investment activity may rise, driven by energy transition projects and heightened defence spending, Xinhua news agency reported.
Public finances, however, continue to face significant pressure. The general government deficit is forecasted to reach 4.2 per cent of GDP in 2024 before gradually decreasing to 3.5 per cent of GDP in 2025 and to around two per cent in 2029.
Meanwhile, the general government debt ratio will rise above 82 per cent this year and further to 85 per cent next year. The debt-to-GDP ratio is predicted to stabilise by the end of the decade, contingent on fiscal adjustments outlined by the government.
Earlier in September, the Finnish Ministry of Finance had admitted that Finland is emerging from recession even though the public economy is expected to remain in persistent deficit.
Nevertheless, an analysis report cited, the country will avoid triggering the European Commission’s Excessive Deficit Procedure (EDP), a mechanism designed to ensure that EU member states return to or maintain discipline in their governments’ budgets.
In June, Finland avoided the EDP after the European Commission’s forecast projected that the Finnish deficit ratio would soon drop below the three per cent threshold.
As global trade recovers, demand for Finnish exports is expected to increase. Additionally, declining domestic inflation and lower interest rates are projected to boost consumer demand and support the recovery of the construction sector.
–IANS
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