Finland's economic growth is slowing down in 2022 – private consumption is not enough to save growth
18 October 2021 - 4:00PM
Finland's economic growth is slowing down in 2022 – private
consumption is not enough to save growth
According to Aktia’s Chief Economist Lasse Corin, Finland's
economy will grow by 3.3% this year, but the growth will slow down
to 2.3% in 2022. The dismantling of the pent-up demand for
consumption and the rapid recovery of the labour market are not
enough to save the growth.
In a report published today by Aktia, Chief Economist Lasse
Corin states that positive labour market developments have restored
consumer confidence to pre-pandemic levels. However, the
dismantling of coronavirus restrictions is not expected to
significantly increase household consumption.
"Household savings have increased strongly during the pandemic,
allowing room for growth in consumption. The restrictions made it
impossible to buy many services. On the other hand, households have
had the opportunity to dismantle the pent-up demand for goods,
which means that the dismantling of coronavirus restrictions does
not bring significant positive support to the demand for goods,”
says Lasse Corin.
Although demand for services is expected to pick up, services
lost during the pandemic will not be fully replaced by increased
consumption – for example, lost restaurant dinners and trips abroad
are not fully replaced by new ones and thus a large part of them is
lost demand. On the other hand, the sales of household appliances,
furniture and various renovation equipment, for example, have been
strong even during the pandemic. In these categories, demand will
decrease as dismantling restrictions and returning to normal
decrease the need for home renewals and improvements.
The rapid recovery of the labour market
exceeded Aktia's
forecasts
The recovery of Finland's employment situation has been a
positive surprise. Compared to Aktia's previous forecast,
unemployment figures will improve to 7.6% this year and to 7.2% in
2022. The decrease in unemployment has been widespread, but the
uncertainties caused by the coronavirus delta variant and the delay
in opening up the economies have put a strain particularly on the
employment of the service and tourism sectors.
"The rapid recovery of the labour market has been conducive in
supporting economic growth. The combined salary of all employees
has already exceeded the pre-pandemic level at a monthly level,"
says Lasse Corin. “In addition to the development of the labour
market, Finland's economic growth is boosted especially by the
positive sentiment in exports – the industrial order book in
particular has increased to such an extent that it has not been
perceived this strong since the period preceding the financial
crisis in 2008.”
More than half of Finland's exports are directed to the European
Union, while 15% are directed to the United States and 15% to Asia.
The positive economic outlook for these regions benefits Finnish
export companies. Exports are expected to clearly grow increasingly
towards the end of 2021 and the volume of exports throughout the
year are expected to increase by 3.9% compared to one year ago.
Exports of services will pick up more quickly than exports of
goods, thus returning to the trend before corona.
The slowdown in the economic growth in the main export countries
of Finland will inevitably also be reflected here in Finland. As
economic uncertainty increases, the risks of growth in consumption
are also elevated.
Further informationLasse Corin, Chief
Economist, tel. +358 40 8080 635, lasse.corin@aktia.fiKatja
Korsinkin, Communications Manager, tel. +358 50 411
3036, katja.korsinkin@aktia.fi
Aktia is a Finnish asset manager, bank and life insurer that has
been creating wealth and wellbeing from one generation to the next
for 200 years. We serve our customers in digital channels
everywhere and face-to-face in our offices in the Helsinki, Turku,
Tampere, Vaasa and Oulu regions. Our award-winning asset management
business sells investment funds internationally. We employ
approximately 900 people around Finland. Aktia's assets under
management (AuM) on 30 June 2021 amounted to EUR 15.6 billion, and
the balance sheet total was EUR 11.2 billion. Aktia's shares are
listed on Nasdaq Helsinki Ltd (AKTIA). aktia.com.
- Aktia-The Chief Economist's forecast 2021
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