Recession | Hypo: The threat of recession is real next year

in Finland the economy’s strong pull may surprise you this year, when the economy grows with the opening of the services and event industry, predicts Hypo-bank, which specializes in housing finance, in its financial review. Next year, however, according to Hypo, economic growth will remain sluggish and the threat of recession is real.

Hypo predicts that the Finnish economy will grow by 2.0 percent this year. Next year, growth would freeze to 0.5 percent.

The national economy is considered to be in recession when the gross domestic product shrinks in two consecutive quarters.

Russian According to Hypo, the prolongation of the war started in Ukraine and related sanctions seems inevitable, which weakens the growth prospects of the Finnish economy.

“The corona pandemic also contributes to the uncertainty of the global economy and accelerates inflation,” writes Hypo’s economist Juho Keskinen in the financial review.

According to Hypo’s forecast, inflation would calm down to 3.0 percent next year.

Wages will not keep up with inflation this year, but according to Hypo, interfering with the situation with national policy is difficult, if not even dangerous. Hypo estimates that, for example, the benefits of reducing fuel taxation would outweigh the disadvantages in the current situation, and it would be difficult to dismantle harmful support packages later.

“In a situation of accelerating inflation, it may be best to keep a cool head and be careful not to throw gasoline on the flames by increasing the purchasing power of households and thus the spiral of inflation,” Keskinen writes.

According to Hypo, there are now many conflicting views in the air. The development in the labor market has been strong, but consumer confidence has dropped to the weakest level in the entire measurement history.

“The contradiction is striking and perhaps speaks of consumers’ crisis fatigue”, Keskinen assesses.