According to Chief Economist Timo Hirvonen, growth will be boosted by the unwinding of pent-up household demand, a pick-up in investment and a strong mood in exports.
Handelsbanken raise their estimates of economic growth this year and next.
According to the bank’s economic forecast, the Finnish economy will grow by 3.5 per cent this year. Next year, the recovery is forecast to continue at a growth rate of 3.2 percent. In 2023, Handelsbanken expects the economy to grow by 1.8 percent, which is faster than trend growth in the longer term.
“Finland’s economic situation now looks good. The release of pent-up demand has accelerated the recovery of services. The investment outlook is bright and exports are pulling. We are going fast for two years, but then we are returning to slower growth, ”Handelsbanken’s Chief Economist for Finland Timo Hirvonen says in a press release.
Handelsbanken believes that inflation will accelerate this year and remain at a higher level than in recent years over the forecast period. Inflation averaged 0.6 per cent between 2015 and 2020, and Handelsbanken expects it to rise to an average of 1.6 per cent between 2021 and 2023.
According to the bank, the positive development of employment will also continue in the forecast years. Handelsbanken forecasts that the unemployment rate will remain unchanged at 7.8 per cent this year, but will start to fall sharply between 2022 and 2023.
The world economy Handelsbanken forecasts growth of 6.0 per cent this year. Next year, growth would continue at a rate of 4.5 per cent, while in 2023 growth is forecast at 3.6 per cent.
According to the bank, economic opening, raw material shortages and bottlenecks in supply chains have accelerated inflation more than expected. However, Handelsbanken expects the inflation peak to remain temporary.
Senior Economist at Handelsbanken Janne Ronkasen according to the market, it is closely following central banks, and in particular the US Federal Reserve, which wants to avoid the market volatility associated with the 2013 reduction in securities purchases.
“The European Central Bank renewed its monetary policy strategy in July. The bar for the ECB’s interest rate hikes is even higher than before, ie the stimulative monetary policy in the euro area and Finland continues. The central bank will reduce the pandemic recovery in 2022, ”Ronkanen says in a press release.