OP Financial Group’s economists have revised up their forecast for Finland's economic growth for next year, said OP in a press release on Tuesday.
Finland's GDP is expected to grow by 2.0% in 2026, up from the previous forecast of 1.5%.
Forecasted GDP growth for the current year remains at 1.0%. In 2027, GDP is also expected to grow at a positive rate of 1.6%.
According to OP's forecast, economic prospects have improved as the tariffs imposed by the United States appear to be less severe than originally announced in April, no counter-tariffs are expected, and the fact that a trade deal has been reached reduces uncertainty.
"In 2025, economic growth has been depressed, especially by weak consumer spending and demand for investments. Uncertainty has been reflected in both businesses and households as increased saving. The flipside of this is that as optimism returns, the recovery of domestic demand can come as a positive surprise," said Reijo Heiskanen, Chief Economist of OP Financial Group.
After a promising start in 2024, Finland's economic recovery stalled during the first months of the year.
"Economic growth will pick up towards the end of the year as uncertainty revolving around the trade negotiations eases. The new tariffs and uncertainty around them took away much of the expected economic growth in 2025. Over the next few years, the economy will recover at a rate that is above the long-term average, or potential growth," Heiskanen said.
Exports have bounced back better than expected. The outlook for demand has improved considerably from previous forecasts, and the tariffs set by the US are not expected to cause significant roadblocks to exports. Export price competitiveness also remains at a good level, despite the strengthening of the euro.
"Consumer spending fell during the first months of the year as the household saving rate increased. Uncertainty among consumers has worsened due to both the poor labour market situation and general uncertainty around trade policy in particular. As this uncertainty clears up, households have the capacity to increase spending, resulting in a positive recovery in consumer spending over the next few years," Heiskanen added.
Different inflation metrics have recently given very different pictures of the development of prices in Finland. This discrepancy will decrease in the future, and the rise in consumer prices will stabilise at around 2%.
"The unemployment rate has increased more than forecast this year, in particular due to the high labour force participation rate. The situation in the labour market is double-edged. While employment has improved at a moderate rate, the unemployment has been weaker than expected. Over the next few years as the economy expands, the employment rate will improve and the unemployment rate will fall, but at a relatively moderate pace," Heiskanen said.
The public deficit will remain large this year, but is expected to decrease over the next years thanks to spending cuts. The increase in the ratio of public debt to GDP is slowing down, but further measures are still needed to turn around the public debt ratio.
The forecast's risks and opportunities relate above all to the international operating environment and balance each other.
Source: www.dailyfinland.fi
