As the outlook for foreign trade is bleak, economic growth in the next few years will be sustained by domestic demand. Public consumption and investments will be of increasing importance to GDP growth, particularly in 2020.
The general government deficit will increase in 2020 when the additional spending foreseen in the Government Programme takes effect. In the absence of measures to improve the employment rate and productivity in the local and central government, general government finances will remain in the red for the next few years. The amount of debt in relation to GDP will again start to grow.
Finland’s GDP is expected to increase by 1.6% in 2019. Residential construction investment will contract and the growth in productive investments will slow down. Private consumption will increase with improved employment and earnings. Export growth will accelerate as a result of increased service exports and ship deliveries.
GDP will grow by 1% in 2020. As service exports will continue to grow at a brisk pace, exports growth will outstrip export demand. Private consumption will continue to grow steadily. Household earnings will be sustained by increased incomes. Growing public consumption will increase domestic demand. Private investment is expected to fall next year as a result of shrinking residential investment.
The number of those employed will increase by 0.5% in 2020. Slowing economic growth and rising nominal wages will undermine employment growth. Nominal earnings are estimated to grow by 3%.
GDP will increase by 1.1% in 2021 and 1.2% in 2022. Sluggish economic growth combined with a faster increase in nominal wages will stop the growth in demand for labour in 2020 and 2021. The employment rate will rise to 73.6% by 2022 while the working-age population continues to shrink.