After coronary resuscitation, problems follow. Labor productivity growth will remain modest and the working age population will shrink.
Danske bank raises its growth forecast for this year to 3.5% from 3.3% previously.
The bank forecasts growth to slow to 2.8 per cent next year. In 2023, economic growth is expected to slow to just 1.6 percent.
“In the spring of 2021, the Finnish economy turned to strong growth after a mild winter season. Growth in the third quarter raised Finland’s pre-kroon GDP level, ”says Danske Bank’s Chief Economist in Finland Pasi Kuoppamäki in the bulletin.
According to him, the GDP will reach the highest possible level of production in 2022, after which the growth rate will slow down to the average growth rate.
The reason for the slowdown is the problems after coronary resuscitation. The bank estimates that the average growth rate of the economy will be rather slow in the coming years, as labor productivity growth will remain at a modest level before the koruna. The shrinking working-age population is also contributing.
“The economic growth ceiling can be raised slightly higher by investing in the automation of production, the digitalisation of the economy and infrastructure, as well as by accelerating labor migration, but the structural slowdown in growth seems almost certain,” Kuoppamäki estimates.
Danske Bank expects the unemployment rate to be 7.6 percent this year and 6.9 percent next year. Earnings are rising slightly faster than inflation.
Danske Bankin the global economy is projected to continue to grow, but high inflation eroding the purchasing power of households and an increase in interest rate cuts will dampen growth. Several central banks have already raised their key interest rates.
“The current inflationary pressures are exceptional in nature, due to the supply-side challenges of the recovery from the pandemic, such as poor access to raw materials and supplies, higher energy prices and, in some cases, labor shortages,” said Danske Bank’s analyst. Antti Ilvonen.
Danske Bank expects the US to raise its key interest rate three times next year, but the European Central Bank will not raise its own interest rate next year.
“Interest rate developments in the euro area are determined by inflation. If inflation stabilizes as expected and there are no signs of a stable acceleration in wage inflation or an increase in inflation expectations, the ECB can consider monetary policy as a whole to be accommodative for a long time to come, ”Ilvonen analyzes.
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