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ETLA forecasts slow recovery in exports
Substantial growth not expected before 2011
The decline in the economy may have bottomed out, and a moderate recovery could start towards the end of the year, says the Research Institute of the Finnish Economy (ETLA) in its fresh cyclical forecast.
According to ETLA, the economic turnaround depends completely on exports, but exports are expected to recover very slowly.
“For next year we predict an increase in exports of five per cent, but it is not until 2011 that a real rise is expected in exports. Even then we will not get back to the level of 2008", says Pasi Sorjonen, the Head of ETLA’s Forecasting Group.
ETLA predicts that exports of goods will collapse by a dizzying 25 per cent this year. Sorjonen calculates that exports should increase by a third in order to reach the same level as before the slump.
The biggest increases in exports next year should be in metallurgy and in manufacturing of vehicles.
Exports should grow in metal products, “which are needed in production in other technology industry sectors that will recover later”.
ETLA believes that metal refining will start gathering speed, once the wheels of industry start turning around the world.
Finland has been in a slump for over a year. The economy took a nose dive in the early part of this year. ETLA has cut its forecast for overall production in Finland for this year by half a percentage point, because the early part of the year was weaker than expected. According to a new forecast, total production will be seven per cent below last year’s figures.
Sorjonen disputes recent predictions of a possible rapid turnaround in the economy. Next year total production is expected to increase by 1.5 per cent.
“We do not believe in rapid economic recovery. There will be slow growth and worsening unemployment”, he says.
ETLA has revised its unemployment forecast upward by one percentage point. The unemployment rate is expected to hit 11 per cent next year, and the number of jobless is expected to be 120,000 more next year than in 2008.