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Finnish institute predicts economic growth for the Nordic country

Xinhua, September 24, 2015 Adjust font size:

Research Institute of the Finnish Economy, ETLA, predicted Finnish exports will grow by one percent this year but 2.7 percent in 2016.

Finland's GDP would increase by 0.2 percent this year, but growth would speed up to 1 percent in 2016 and to 1.3 percent in 2017. ETLA calmed down fears that the deficit in public sector would trigger measures from the European Commission within the next few years.

Research Director Markku Kotilainen told national broadcaster Yle that the moderate wage agreements reached for 2015 and 2016 have improved the competitive edge. "The wages in some countries competing with Finland have risen faster," he said.

Kotilainen said Finnish exports are still 18 percent lower than in 2008.

The predictions by ETLA were in line with recent assessments by several Finnish research institutes. Last week the International Monetary Fund, the IMF said the Finnish GDP would grow by 0.4 percent this year and 0.9 percent next year.

ETLA expressed the view that export- and investment-led growth in Finland requires continued wage moderation and improvement in competitiveness.

In 2015, the volume of goods exports will decrease by 1.5 percent while exports of services will grow by 0.5 percent. Total exports will decline by one percent. In 2016, the volume of total exports is projected to grow by 2.7 percent. Exports to Western countries will be fuelled by market growth. In 2017 the volume of exports will increase by 3 percent.

The growth of private consumption will be dampened in the coming years through public sector austerity measures, moderate wage settlements, weak employment trends and a slight acceleration of inflation.

The unemployment rate will rise to 9.6 percent in 2015, dropping to only 9.5 percent in 2016. Consumer prices will fall 0.1 percent this year owing to the decrease in oil prices while next year the inflation rate will rebound to 0.7 percent.

Research Director Kotilainen told Yle the risk of Finland being subject to the public sector deficit measures from European Commission is now less than some time ago.

"Finnish public sector deficit was in excess of three percent, but now the austerity measures are shrinking the deficit", he said. "Public sector debt can lead to that later, but not within the next few years", Kotilainen asserted.

Finnish Prime Minister Juha Sipila claimed over the weekend that Finland was currently on "the brink of facing EC measures". Endit