Finnish economy estimated to grow 5.1 per cent this year

Labour Institute for Economic Research joins flattering growth predictions

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Finland's economy will grow a hefty 5.1 per cent this year, estimates the Labour Institute for Economic Research (PT) in its latest forecast, published on Tuesday.
      PT is not the only one to predict flattering growth for the country. The startlingly competitive growth prediction, however, is partly explained by last year's forestry industry labour dispute, which affected the comparison figures, adding another percentage point to this year's growth.
      The actual growth is mainly owing to domestic consumption and investments, in addition to the technology industry, which continues to thrive internationally.
      The current favourable developments in the Baltic region, the Eurozone, and within the global economy also lend wings to Finland's upturn.
      In the United States, on the other hand, growth is slowing down dramatically. The growth rate of the Eurozone countries overtook that of the US in the second quarter this year, which is unusual to say the least.
      In terms of annual growth, however, the Euro countries will still trail behind the U.S., with an estimated growth rate of 2.4 per cent against America's 3.3 per cent. PT predicts that already next year the old continent's economic growth will challenge that of the US.
     
For the Eurozone, PT predicts 2.6 per cent growth for 2007. The emphasis continues to lie heavily on foreign trade and investments, but to a gratifying extent the area's own consumption will be a contributing factor.
      Even the cautious German, French, and Italian consumers have expressed their trust in the positive labour and consumption developments.
      "Once consumption picks up, the growth curve will not be flattened quickly", PT research coordinator Eero Lehto points out.
     
The slowing down of the American economy should not threaten the situation in Europe, thanks to the sufficiently large internal market within the region.
      Only if the recession in America gets out of hand will it eventually affect the development in Europe as well.
      The three per cent rise in VAT that Germany will introduce at the beginning of 2007 should also not materially threaten Europe's positive development.
     
Finland's growth peak is not expected to last very long.
      For 2007, PT forecasts more moderate growth in the region of 3.5 per cent.


Previously in HS International Edition:
  Bank of Finland forecasts strong economic growth to continue in Finland (22.3.2006)

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  Labour Institute for Economic Research

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