Bank of Finland raises 2016 economic growth forecast to 1.1 pct

The Bank of Finland on Thursday predicted a higher growth in Finnish economy, but said the overall growth in economy would still remain below the eurozone average.

The Bank of Finland raised its prediction of gross domestic product (GDP) growth for this year to 1.1 percent, from the 0.7 percent forecast made in December.

According to further prognosis, the Finnish economy would grow by 1.1 percent in 2017 and 1 percent in 2018. In 2015, the Finnish economy grew by 0.5 percent.

The positive prediction by the Bank was made largely based on domestic demand. Private spending has developed better than expected.

This year growth of exports is predicted to remain under one percent, but would reach 2.5 percent in 2017 and 2018.

Governor of the Bank of Finland Erkki Liikanen told national broadcaster Yle that the recent agreement on the labor market meant a real decline in the unit costs of export industries.

Unemployment is declining slowly. The Bank predicted 9 percent of the workforce would be without jobs at the end of 2018. In April, the rate of unemployment was 9.8 percent.

Liikanen underlined that even the change of trend in employment as such was important. He pointed out that among the developed countries, Finland suffered the largest drop in exports and industrial production since the economic crisis in 2008.

The growth of public debt would continue. The Bank of Finland predicted that in 2018 public debt would reach 70 percent of the GDP. Last year the ratio was 63 percent. Endit