Aktia Bank Plc
June 2, 2022 at 8:00 a.m.
from Aktia economic forecast: the period of strong growth is behind us
According from Aktia Chief Economist Lasse Corin, the coronavirus pandemic has been a deep and brief shock to the economy, while Russia’s attack on Ukraine will cause a less profound shock but stretched period of uncertainty. He predicts very moderate economic growth for next year.
In the economic forecast released today by Aktia, Chief Economist Lasse Corin predicts that economic growth will slow to 1.6% this year and be modest at 0.9% next year. “While the coronavirus pandemic and its economic impact have taken a back seat, Russia’s attack on Ukraine has plunged the global economy into a new period of uncertainty,” said Lasse Corin.
Finnish exports and industry have survived the pandemic with little damage, as Finland produces various types of investment and industrial products for foreign companies. The current situation is different. “We expect the economic uncertainty caused by the war to be significantly longer, which weakens the willingness of foreign companies to invest and, therefore, the export prospects of Finnish companies,” Corin said.
There is also a glimmer of hope on the horizon for Finnish exports. The depreciation of the euro will improve the competitiveness of Finnish exporting companies and lessen the blow to their economies.
With respect to imports, Corin considers the greatest risk to be related to the availability of imported goods rather than the increase in import prices.
The strain on private consumption growth this year and next is caused by more than one factor, but consumption also has an obvious stimulus. “The balance between uncertainty and inflation risks comes from the consumption of services. Corona restrictions have been dismantled and consumers can finally eat out and use other services Growth in service consumption will balance the otherwise weak consumer outlook. However, it is important to remember that the coronavirus has not been definitively defeated and that the recovery of demand for services requires that the pandemic remains under control”, says Corin.
In Finland, the acceleration of inflation is mainly due to the increase in the prices of imported products and not to an exceptionally high domestic demand, contrary to the United States. Corin predicts that consumer prices will rise, i.e. inflation will occur, by 5.1% in 2022 and slow to 1.9% in 2023. “Finland is a small country. We have no choice but to embrace the price development of the world market with open arms, and that is what the high inflation rates in Finland are for,” Corin said.
Lasse Corin, chief economist, tel. +358 40 8080 635, lasse.corin (at) aktia.fi
Lotta Borgström, Director, Investor Relations and Communications, tel. +358 10 247 6838, lotta.borgstrom (at) aktia.fi
Aktia is a Finnish asset manager, bank and life insurance company that has been creating wealth and well-being from generation to generation for 200 years. We serve our customers across digital channels and face-to-face from our offices in Helsinki, Turku, Tampere, Vaasa and Oulu regions. Our award-winning asset management business sells investment funds also internationally. We employ around 900 people in Finland. from Aktia assets under management (At M) at 31/12/2021 amounted to EUR 15.5 billion and the balance sheet total to EUR 11.7 billion. from Aktia the shares are listed on Nasdaq Helsinki Ltd (AKTIA). aktia.com
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