HELSINKI, Oct. 14 (Xinhua) -- The Finnish economy is showing signs of renewed recovery after slowing earlier this year, with gross domestic product (GDP) expected to grow by 2 percent in 2026, according to OP Financial Group's latest forecast released on Tuesday.
"Confidence in the Finnish economy has improved above the euro area level in recent months, and several indicators suggest that the economy has already begun to recover," said Reijo Heiskanen, the group's chief economist. "Trade policy risks have eased, but not disappeared."
Heiskanen said exports are supported by the recovery of key Northern European markets and Finland's solid price competitiveness, even as the stronger euro and new U.S. tariffs weigh on near-term prospects.
Investments are picking up as the construction sector moves past its lowest point and corporate spending increases. Public investment in defense is also bolstering growth, according to the report.
Private consumption, which weakened amid uncertainty earlier this year, is now set to rebound as disposable incomes rise and the savings rate declines from its unusually high spring level.
The unemployment rate reached about 10 percent in the summer, reflecting both weaker employment and a high labor force participation rate. As growth strengthens, employment is expected to improve and the jobless rate to decline.
The group forecasts the public deficit will gradually narrow to around 3 percent of GDP as private consumption and investment rise, keeping Finland's current account roughly balanced.
Globally, OP's economists said economic growth has stabilized after the trade tensions seen in the spring, though trade policy risks remain. The world economy is expected to grow slightly slower this year than in recent years before returning to a moderate pace in the coming years.
Tariff increases will also weigh on U.S. economic growth in the near term, as rising consumer prices dampen demand, Heiskanen said. He noted that euro area growth should remain steady at around 1.5 percent, with inflation near the European Central Bank's 2 percent target and interest rate cuts largely complete.
"From Finland's perspective, it is positive that the German economy in particular is recovering," he added.
