Finnish Finance Ministry raises 2018 growth to 2.6 pct

HELSINKI, April 13 (Xinhua) -- The Finnish Ministry of Finance on Friday raised its prediction of the growth of the Finnish economy this year to 2.6 percent. The previous forecast made in last December had been 2.4 percent.

The ministry said the growth will be envisaged at 2.2 percent in 2019 and 1.8 percent in 2020, and will decline to 1.5 percent in the medium term. The increased growth in 2018 is attributable particularly to domestic demand and foreign trade.

The ministry saw that Finnish public economy will be strengthened in the years to come because of the economic growth, better employment and measures taken to curb the growth of public spending. The economy is to show a surplus in 2020 after years of imbalance.

The level of employment improved in 2017 as a result of the rapid and broad-based upturn in economic activity. The improvement in employment gathered pace exceptionally quickly late last year and early this year, pushing up the employment rate to around 71 percent.

Employment rate is predicted to attain 72.5 percent in 2020.

The ministry noted, however, that there will be pressure caused by the higher spending due to the aging of the population and the major defense budgeting on new jet fighters during the next decade.

Earning growth is expected to be 1.9 percent in 2018. The ministry noted, however, that due to a more widespread use of company level labor contracts, the wage drift will remain below average.

Industries have in recent years pushed for "local tariff agreements" in companies, instead of following the agreements reached at the level of trade unions and industry organizations.

The following two years, meanwhile, will see higher earnings on account of labor tariff deals. The rise in earnings will accelerate in 2019 to 2.5 percent as a consequence of the timing of contractual pay increases.

The year of 2020 will see the return of public sector holiday bonuses, which was taken away as an austerity measure in 2015. The return will contribute to a steeper rise of earnings reaching 2.8 percent, the ministry noted. Enditem