Cyclical|Construction is gradually starting to suffer from its deepest pit, predicts the OP group.
Finland the bottoming out of the economy is over, and the economic recovery will continue steadily and strengthen next year.
This is what OP Group economists predicted in their business cycle forecast published on Tuesday.
According to them, the economy developed in the beginning of the year even better than expected and turned to growth.
In addition to good news, there is also bad news about the economy. The bad news is, among other things, that the export market is still slowly recovering.
“As a whole, the growth outlook for the Finnish economy has remained unchanged on an annual basis,” says OP Group’s chief economist Reijo Heiskanen in the company’s announcement.
The banking group’s forecast remained unchanged compared to the business cycle forecast published in April.
According to the forecast, OP estimates that Finland’s gross domestic product (GDP) will shrink by an average of 0.5 percent this year.
For next year, OP already expects a small economic growth spurt. It predicts GDP to grow by 2.0 percent in 2025. Growth will strengthen as interest rates fall and export markets recover.
After a small growth spurt, a return to the leisurely growth trend is ahead. For the year 2026, OP predicts only 1.3 percent growth.
Economy the weakest link, i.e. the construction starts from the deepest point, opines OP. According to him, this is clearly visible in next year’s investments. Investments will clearly grow in the next few years.
Exports will also gain additional momentum when the main export markets in Europe recover. Exports recovered in the early summer after suffering from labor struggles in the spring.
Private consumption, on the other hand, will grow slowly this year, according to the OP. Although real incomes are growing relatively well, consumers are saving more than before.
Next year, private consumption will pick up, OP predicts.
In autumn Finland has seen a jump in inflation, when the increase in value added tax raises prices. OP predicts that inflation will return to around two percent in the next few years.
The banking group believes that the labor market situation is stabilizing. As the economy recovers, the labor market starts to pick up. The bank predicts that the number of employed people will peak in 2026.
OP predicts that Finland’s public finance deficit will be at its largest this year and will start to decrease next year thanks to economic growth and adjustment measures.
of the Eurozone the group predicts that the recovery will continue at a leisurely pace in the near future. Next year, the recovery will be supported by interest rate cuts and global economic growth.
At the beginning of the year, the economy of the euro area pushed for a fine growth, driven by exports and consumption. However, economic surveys reported that the situation worsened again in the early summer.
The OP group expects the European Central Bank to continue lowering interest rates during the fall. However, their exact timing is still uncertain. Because of this, the development of market interest rates is probably more like a winding forest path than a line drawn with a ruler, even though the main direction is downward.