Danske Bank cuts Finland growth forecasts as recovery remains fragile
Danske Bank has lowered its forecast for Finland's economic growth this year to 0.3 percent from 0.9 percent, and cut its projection for next year to 1.5 percent from 2.0 percent, reported Xinhua.
In its latest economic outlook published on Wednesday, the bank said there are cautious signs of a turnaround, citing rising industrial orders, a pickup in housing transactions and new housing loans, and early improvements in the labour market. At the same time, it warned that Finland's public debt is increasing at a worrying pace.
"Industry and an improved investment outlook are the bright spots in the economy," said Kaisa Kivipelto, economist at Danske Bank. She noted that companies' confidence in the future has strengthened this year, order books have improved despite trade policy uncertainties, and investment prospects have brightened, with the most significant phase of recovery expected in 2027.
Public investment is expected to remain strong in the coming years, driven mainly by defence and security spending, while a recovery in housing construction is seen as a key private-sector support to growth.
From an export perspective, Finland's price competitiveness is "in good shape," the report said. It noted that the trade agreement between the United States and the European Union has reduced tariff uncertainty, while Germany's investment package and Europe's growing defence procurement are supporting Finnish companies' export prospects.
However, private consumption has weakened and consumer confidence remains relatively low, weighed down by perceptions of high unemployment risk. According to Statistics Finland, the unemployment rate rose to 9.2 percent in the third quarter of 2025.
Following the bank's revision, leading Finnish economists on Wednesday largely agreed that gross domestic product (GDP) growth this year will be sluggish, though their views on 2026 vary.
Juho Koistinen, head of forecasting at the Labour Institute for Economic Research (LABORE), told a Finnish language business daily Kauppalehti that growth in 2025 is likely to be close to zero. Danske Bank senior analyst Ozan Yanar told the paper that it is clear the "turnaround in the Finnish economy has been delayed again."
For 2026, Aki Kangasharju, CEO of the Research Institute of the Finnish Economy (ETLA), said the institute maintains its forecast of 1.4 percent growth, while Pellervo Economic Research Institute (PTT) CEO Markus Lahtinen said PTT still considers its September projection of 0.9 percent valid, noting it is the most pessimistic of the forecasts.
Finland's economy contracted by 0.3 percent in the third quarter of 2025 from the previous quarter and by 0.6 percent year-on-year, Statistics Finland said earlier.
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