Finland’s Ministry of Finance has revised its latest growth forecast for 2011 to 3.6% from 2.9% in December 2010. According to the ministry, strong external demand is accelerating the growth of exports, which will drive up capacity utilization. As a result, it is expected that investment will gather momentum and that economic growth will continue to expand. Output growth in 2012 is expected to average 2.7%.
Finland’s key export markets Germany, Sweden and Russia have shown strengthening economic growth, which is increasing import demand in these countries. The main driver of Finnish export growth is the traditional metal industry, as export orders for machinery and metal products increased sharply during 2010. Export expectations also remained very strong in the chemical industry at the start of the year.
Rising raw materials prices coupled with higher market interest rates will push inflation to over 3% in 2011, according to the ministry. Inflation is being driven, above all, by rising world market prices of food and energy raw materials. The projected unemployment rate for 2011 is 7.6%, which in annual average terms is almost one percentage point lower than in 2010. Improving employment means that households’ earned income is increasing. The confidence of Finnish households in the future remains strong and spending propensity is high, according to the ministry.
Source: Finland’s Ministry of Finance