HELSINKI, March 15 (Xinhua) -- Finland's economy is expected to remain in recession throughout 2024, with signs of recovery emerging only towards the end of the year, the Bank of Finland said in its interim forecast published on Friday.
The central bank forecast a 0.5-percent contraction in Finland's economic growth for this year, with a projected rebound towards the end of the year. Looking ahead, the bank predicts the country's gross domestic product (GDP) will grow by 1.7 percent in 2025 and 1.5 percent in 2026.
In its December 2023 forecast, the bank projected a GDP decrease of 0.2 percent for 2024, and a growth of 1.5 percent and 1.3 percent respectively for the coming two years.
The bank attributed the sagging economy to the elevated levels of prices and interest rates, as well as the weak residential construction and declining exports. On a positive note, it said employment is still strong, and inflation has slowed down.
"Although the economy's performance has been weaker than forecast, the future outlook remains unchanged," Meri Obstbaum, Bank of Finland's head of forecasting, said in a press release. "The recession has already reached its lowest point, and we expect growth to be rekindled this year as household purchasing power strengthens."
The bank forecast that inflation will decrease to below 1.0 percent this year but anticipates a slight increase in 2025.
It warns that the impact of geopolitical tensions might further weaken economic growth. Meanwhile, inflation in the euro area could prove to be more persistent than anticipated, and any delay in cutting interest rates would prolong the recession, it said.
