Economists at the OP Financial Group have downgraded their forecast for Finland’s economic growth this year, due to the impact of the novel coronavirus epidemic on the world economy.
According to the new forecast, the Finnish economy will register no growth in 2020. OP’s economists estimated Finland’s GDP would expand by 0.5% next year.
The forecast was revised because the problems the coronavirus is causing in production chains are bigger than expected and also because of increasing uncertainty. In addition, the most recent information suggests that economic performance in 2019 will fall short of preliminary figures.
The new forecast is based on what is termed "a moderate scenario" where China’s economic growth would slow down to an average of 5.4% this year after a short but steep dip. OP’s economists previously predicted that China’s economic growth would be 5.9%. As a result, the global economy is expected to slow down to 2.6% this year (previously 2.8%).
"The Finnish economy is vulnerable to fluctuations of export markets and China has a great impact on the Finnish economy. Finland is among those European countries that will suffer the most," Reijo Heiskanen, OP’s Chief Economist stated in a release on Wednesday.
Slowing global economic growth is reflected in Finland primarily through falling exports. Domestic consumption is estimated to grow more or less in line with the previous estimate. Due to the weaker growth, unemployment is likely to increase, but the employment rate may remain slightly higher than in the previous years.
"If the epidemic drags on for several quarters, at least a mild recession is probable. Recovery is also essential. If China’s economy rebounds to its previous trend, the Finnish economy could recover quickly next year,” Heiskanen added.