Bank Of Finland sees subdued Economic Growth as the euro sovereign debt dent previously plotted economic growth trajectory.Thursday, 15 December 2011
Finland's economic outlook has deteriorated further as the sovereign debt crisis and uncertainty over the financial system weakens both foreign and domestic demand, Finland's central bank said Thursday.
The bank reports that the outlook for the Finnish economy has deteriorated again. Sovereign debt problems and related uncertainty over the state of the financial system are weakening both foreign and domestic demand. ‘Developments in recent months have made it clearer than before that economic growth will at best be sluggish in the immediate years ahead,’ said Governor Erkki Liikanen at the press conference for the release of the latest issue of the journal Euro & talous.
AdvertisementGDP is forecast to grow 2.8% in 2011, but only 0.4% in 2012. For 2013, growth of 1.8% is expected. ‘The forecast is based on the assumption that the euro area debt crisis will not get any worse and the slowdown in growth in both the euro area and the global economy will be relatively short-lived. This assumption contains a clear downside risk for the forecast,’ stressed Governor Liikanen.
Export growth has been weak, due to the capital-goods-weighted structure of Finnish exports and a contraction in the export of services. The trade account has entered deficit, and the current account is forecast to only just remain in surplus. The strong increase in economic uncertainty will postpone investment projects in Finland, as elsewhere, and investment growth will peter out. Household consumption will grow much more slowly, with sluggish growth in real incomes and a weak trend on the employment front.
Details from the bank of Finland here
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