Country Forecast Finland October 2014 Updater

Country Forecast Finland October 2014 Updater



  • Alexander Stubb replaced Jyrki Katainen as prime minister and head of the National Coalition Party (Conservatives, or KOK) in June 2014. Soon afterwards the government agreed a new programme that prioritises growth over austerity. The budget proposal for 2015 also contains new stimulus measures designed to appease the electorate.
  • In September the Green Party withdrew from Finland's multiparty coalition after members of parliament (MPs) approved plans for a Russian-backed nuclear reactor. This follows the Left Alliance's exit from the government in protest at fiscal adjustment plans in March, and leaves the remaining four-party coalition with an uncomfortably slim three-seat majority in parliament.
  • The level of political instability has increased, but there are precedents for coalitions successfully governing with narrow majorities. The Economist Intelligence Unit's central forecast is that the government will see out its term until April 2015. At the next election the KOK has a good chance of retaining its position as the senior government party, possibly in coalition with the Centre Party (KESK) and the Social Democratic Party (SDP).
  • The general government deficit stood at 2.5% of GDP in 2013 and widened to an estimated 3.6% in 2014. We expect it to narrow to 2.1% in 2015 and to approach balance by the end of the forecast period. We forecast that the public debt/GDP ratio will peak above the EU's Stability and Growth Pact (SGP) threshold at 61.2% in 2015, before falling gradually to around 56% by 2019.
  • After an economic contraction of 1.2% in 2013, real GDP will contract again in 2014, by an estimated 0.2%. Thereafter we project a modest expansion of 1.2% in 2015. Against a backdrop of rising geopolitical tensions and weakness in the euro zone, downside risks to this forecast are high. Average annual real GDP growth is projected to pick up to 1.9% in 2016-19.
  • We expect the current account (in deficit since 2011) to return to surplus in 2017. The external sector should weigh on economic growth in 2014, before exerting a more positive influence on growth later in the forecast period as the global growth backdrop improves.
  • We forecast that inflation (EU harmonised measure) will pick up to 1.9% in 2015 after moderating to an estimated 1% in 2014, from 2.2% in 2013. It will average 2% in 2016-19.


Country Forecast Finland October 2014 Updater
Country forecast overview: Highlights
Country forecast overview: Key indicators
Country forecast overview: Business environment rankings
Country forecast overview: Finland's business environment at a glance
Fact sheet
Outlook for 2015-19: Political stability
Outlook for 2015-19: Election watch
Outlook for 2015-19: International relations
Outlook for 2015-19: Policy trends
Outlook for 2015-19: Fiscal policy
Outlook for 2015-19: Monetary policy
Outlook for 2015-19: Economic growth
Outlook for 2015-19: Inflation
Outlook for 2015-19: Exchange rates
Outlook for 2015-19: External sector
Data summary: Global outlook
Data summary: Gross domestic product, current market prices
Data summary: Gross domestic product, at constant prices
Data summary: Gross domestic product by sector of origin
Data summary: Growth and productivity
Data summary: Economic structure, income and market size
Data summary: Fiscal indicators
Data summary: Monetary indicators
Data summary: Employment, wages and prices
Data summary: Current account and terms of trade
Data summary: Foreign direct investment
Data sources and definitions

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