Handelsbanken economist: Finland experiencing balanced rising trend
GDP growth forecast: 3.7 percent
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Tiina Helenius, head economist of the Finnish branch of the Swedish bank Handelsbanken, sees mainly good times ahead for the Finnish economy.
"Finland is undergoing a balanced, brilliant upswing, based on growth in both exports and domestic demand. Something similar took place sometime in the late 1990s."
This year she expects Finnish GDP to grow at a rate of 3.7 percent.
However, there are also potential problems - especially the appreciation of the euro against the US dollar, which could hurt Finnish exports, which account for 45 percent of Finnish GDP.
On the other hand, she says that increasing prosperity in Russia could help balance out the situation. Russia is already Finland’s largest export country - although much of Finland’s nominal exports to Russia are, in fact, goods that are in transit from other countries to Russia via Finland.
"Finnish companies have already invested heavily in Asia. It is interesting to see when they will be ready for serious input into Russia as well."
The prospect of inflation is a topic that keenly interests Helenius. Inflation fears in the United States have pushed down stock market prices there, which has been reflected on European bourses as well.
Inflation could force the Federal Reserve to tighten the supply of investment capital and raise the reference rate, ultimately slowing down growth in the whole world.
Equally interesting in her view is the prospect of inflation in China, which is still experiencing a dazzling annual growth rate of nine percent. The country’s massive reserves of labour have helped abate inflationary pressures.
Helenius also does not expect the USA to raise interest rates.
"I believe that the Federal Reserve will leave interest rates at the current five percent level, or make just one increase at the most."
She expects significantly slower growth in the United States in the summer, and a mere 1.7 percent rate of growth next year. She predicts that the Federal Reserve will cut interest rates already near the end of this year.
Helenius says that the difficulties in the United States will also be reflected in Europe, leading to weak economic growth here. "For this reason, the European Central Bank is maintaining a moderate line on interest rate hikes.
Helsingin Sanomat
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| 19.5.2006 - TODAY |
 Handelsbanken economist: Finland experiencing balanced rising trend
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