Economic forecast criticised for forgetting impact of immigration
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An assessment of the European Union's stability programme drawn up by the Ministry of Finance has been criticised as being overly pessimistic. According to Jaakko Kiander, director of the Labour Institute for Economic Research, the Finance Ministry is not sufficiently considering the impact of increased immigration in its predictions of a slowdown in consumer spending.
Kiander says that the aim of the Finance Ministry's report is to deliberately create a negative impression of the country's economy.
He points out that the new population forecast of Statistics Finland predicts an annual influx of 10,000 immigrants - about 400,000 by 2050.
The assumptions in the Finance Ministry's programme mainly rely on population forecasts drawn up in 2004. At that time the annual immigration forecast was just 6,000.
"Immigrants are generally of the best working age. If they get work, it improves the productivity potential considerably", Kiander points out.
The examination of the EU's stability programme was approved by the government in November. The figures suggest that Finland's public finances are on shaky ground.
Minister of Finance Jyrki Katainen (Nat. Coalition Party) is to present the Prime Minister's report on the economic policy situation to Parliament on Monday next week.
Jaakko Kiander says that the Finance Ministry's paper is exceptional in that it downplays economic trends "just in case".
"The Finance Ministry assumes that growth in private consumption will stop in the coming years, and as a result, yield from value-added tax will develop poorly", Kiander says.
In his view there is no basis for this assumption.
"This trick has brought tax income down, and achieved a deficit in sustainability", he says.
Finance Ministry official Jorma Tuukkanen at the Ministry of Finance reveals that one of the key factors in the Foreign Ministry's assessment is an increase in the number of residents over the age of 85.
Life expectancy has grown, which Tuukkanen feels is boosting growth in care costs.
Tuukkanen feels that the forecast does not need to be seen as exclusively grim.
Increased life expectancy will not necessarily impose additional costs on society, if the old people are in good condition.
"Sodoku, and Nordic walking, which are popular among Finns, are a good combination. Sodoku keeps the head in good shape, and Nordic walking is healthy in other ways", Tuukkanen says.
He warns against relying on immigration too much, noting that all EU countries are competing for labour.
Helsingin Sanomat
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| 12.12.2007 - TODAY |
 Economic forecast criticised for forgetting impact of immigration |
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