According to Nordea, additional adjustment measures are necessary to tackle the growing trend of public financial indebtedness. The bank has revised its forecast for Finland’s economic growth next year due to the government’s decision to raise taxes and cut spending. As a result, GDP growth is now predicted at 1.5 percent in 2025, down from the previously estimated two percent.
Nordea anticipates a one percent shrinkage in Finland’s GDP this year, with a return to growth expected later in the year. Despite challenges in the housing market and weakening consumer purchasing power, the bank expects economic growth to be supported by slowing inflation, improving household purchasing power, and interest rate cuts by central banks. Additionally, Nordea predicts a rise in private consumption this year alongside an improvement in export demand as global economic growth picks up.
The bank suggests that these adjustments will help improve the balance of public finances next year and reverse the growth of debt ratio through a combination of economic growth and adaptation measures. While these measures may initially slow down economic growth, they are deemed necessary to address the increasing level of public financial indebtedness. Furthermore, Nordea expects that real earnings growth next year will boost consumer confidence and support increased private consumption.
In conclusion, Nordea’s assessment highlights the need for additional adjustment measures to address public financial indebtedness and support economic growth in Finland. Despite challenges in certain sectors such as housing and consumer purchasing power, there is potential for improvements in economic indicators like private consumption and export demand with the implementation of government measures.
