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Private consumption and investment will recover slowly. Subdued growth in the euro area economy and the increasing geopolitical tensions will curb the growth in Finnish exports. Inflation will remain moderate in the immediate years ahead.

The United States is planning widespread tariffs on imported goods. If implemented, these would weaken Finland’s economic growth. Even greater harm to growth would be brought by any countermeasures adopted by other countries and they mounting uncertainty over the future direction of international trade policy.

Finland’s public finances will continue to be considerably in deficit in the immediate years ahead. A framework for reducing government debt ratios is provided by the EU’s new fiscal rules. Turning Finland’s debt ratio onto a declining path will require sustained fiscal consolidation measures for some time to come.

The significance of Finland’s service exports has grown rapidly. Service exports comprised about one third of the total value of exports in 2023. Finland’s service export destinations are dominated by a fairly small number of countries, the most important being the United States.

The Finnish economy will see a slow return to growth, but the pace of growth will gradually pick up. Inflation will no longer erode the increase in earnings, and the reduction in interest rates will fuel investment and consumption. The recovery will be overshadowed by uncertainty in the outlook for the global economy.

Finland is moving on from the recession in its economy. Growth will be slow initially but will gradually pick up. Inflation will no longer be erod-ing the increase in earnings, and the reduction in interest rates will fuel investment and consumption.

Climate change and biodiversity loss pose threats to financial stability. The financial sector in Finland seems to have less exposure to emissions-intensive businesses than in many other euro area countries, but the risks surrounding the transition to carbon neutrality can hardly be avoided in Finland either.

Although Russia’s output growth has slowed in recent months, the official preliminary estimate puts third-quarter on-year GDP growth at 3 %. We should not put too much emphasis on the exact number due the heightened uncertainty of Russian statistics since the invasion of Ukraine.

Geopolitics can bring about volatility in inflation and in the rest of the economy. However, geopolitical surprises and their consequences are not particularly well understood yet in economics. The impact of such surprises on euro area inflation nevertheless varies case by case.

Employment has grown strongly in the euro area since 2020. This has been attributable to both demand and supply factors. In the near future, population ageing will reduce the supply of labour in the euro area. The impact of population ageing will nevertheless be softened by a rise in the labour force participation rate, work-based immigration and a reduction in structural unemployment.

A considerable proportion of the corporate loan stock in the euro area consists of loans with a fixed – rather than a variable – rate of interest. However, this proportion differs by industry and even more so by country. In Germany and France, the majority of corporate loans are tied to a fixed rate. In Finland, the proportion of fixed rate loans is small.

Incoming American president Donald Trump campaigned on a promise to impose additional tariffs on US imports as a way to reduce the country’s current account deficit and boost domestic production. Initially, the proposal was for a 10% tariff, but later Trump has talked about a 20% tariff. In addition, tariffs on China would be at least 60%. Who eats the costs of such tariffs?

It is well known that the real natural rate of interest, r*, is an inherently unobservable variable, and therefore reasonable estimates of its level are hard to determine. In our search for such estimates, we first apply a semi-structural model by Holston, Laubach and Williams (2023) and the Federal Reserve Bank of New York’s recent estimate of the euro area natural rate.

The annual BRICS Summit was held last week in Kazan, the capital city of Russia’s Tatarstan region. The original member countries – Brazil, Russia, India and China – held their first get-together under the BRIC banner in 2009. In 2011, South Africa joined the group, and an “S” was added to the group’s name – BRICS. This year’s Kazan summit included a number of new BRICS inductees, including Egypt, Ethiopia, Iran and the United Arab Emirates (UAE). Turkey’s president Recep Erdoğan also attended the event.

Finland’s economy is making a sluggish recovery from recession. According to the Bank of Finland’s September 2024 interim forecast, Finland’s gross domestic product (GDP) for the full year 2024 will again show a contraction.

The above headline aptly summarizes the preliminary 2025–2027 budget framework submitted to the Duma in late September.

The decrease in inflationary pressures has already allowed two interest rate cuts this year in the euro area. Growth in the euro area's economy is still fairly subdued and is underpinned mainly by the service sectors, as industrial output continues to be weak.

Recent data on the state of the euro area economy are downbeat. The economic development of the euro area rests increasingly on services. ECB council decided to keep key interest rates unchanged.

The Finnish economy is recovering from the recession. Inflation is low and an improvement in the purchasing power of households is supporting a recovery in private consumption.

At the turning points of business cycles, economic recovery has often turned out to be faster than forecast. Growth could pick up if consumers’ confidence in the economy and in their own finances were to strengthen more than expected and exports to grow more quickly than forecast.