Finance Ministry expects slight economic improvement next year

Recession to eliminate 160,000 jobs

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The Ministry of Finance predicts that worst of the recession will be over in the early summer of next year. In a forecast issued on Tuesday morning, the ministry said that Finnish GDP will decline by six per cent this year, but will grow next year by slightly less than one half of a per cent.
      The recovery is not expected to be very strong, however, and unemployment continues to grow, with a total of 160,000 jobs expected to disappear in two years. The deterioration in the financial position of the public economy is weakening even faster than in 1991.
     
The unemployment rate is expected to reach 10.5 per cent next year. Within two years the jobless rate will have grown by as much as 4.1 percentage points.
      At the same time, the employment level is going down to the level it was ten years ago. Next year an average of 280.000 people will be without work.
      While there are signs of greater stability and gradual recovery in the world economy, the positive effects are reaching Finland somewhat slowly.
     
The taxation level is going down both this year and next, in spite of the deep dive in public finances.
     
State debt is growing by EUR 23 million this year and next, reaching EUR 78 billion next year, which is nominally higher than in 1997, which set the previous record.
      However, seen in proportion to overall output, the debt is considerably smaller, and accounts for about 44 per cent of GDP.
      Growth in the coming years will be curtailed by the effects of current costly stimulus efforts; finance policy will have to be tightened because of the heavy public indebtedness.
      “Getting back on track to sustainable growth requires a strengthening of confidence and the start of market-driven growth. We especially need to make sure that the actions taken by government do not lead to protectionism, and do not push aside the enterprise of the private sector and the growth that springs from it”, the Ministry of Finance emphasises.


Previously in HS International Edition:
  Two economic forecasts promise slightly improved conditions for end of year (2.9.2009)
  Sampo Bank forecasts continued unemployment growth (15.6.2009)
  No signs yet of economic upturn in Finland, despite positive glimmers in US (15.4.2009)

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