In an outlook published on Wednesday, Danske Bank said Finland's economy was improving as the government continued to lift Covid-related restrictions and that businesses were able to operate "almost as normal."
The bank raised its 2021 GDP growth forecast for Finland to 3.3 percent and a lower rate of 3.0 percent in 2022, due to a lack of skilled workers.
The bank said Finland's estimated second-quarter GDP growth of 2.1 percent was nearing pre-pandemic levels, and added that the Finnish economy has "recovered more frontloaded than we have expected."
"Retail sales have stayed at an elevated level and service businesses are doing much better than before. Manufacturing has continued to grow and capacity utilisation has increased. Business confidence indicators are positive. Surveys indicate that large companies in particular plan to invest more than last year. Construction as a whole is moving sideways, but housing construction has increased," the bank said in its outlook.
Public deficit
However, the bank also said that Finland's state deficit had remained large despite the economic growth. Citing the government's third supplementary budget, the bank said Finland owed 14bn euros this year, adding that the situation was not an improvement over last year.
"According to the budget proposal, central government debt will rise to EUR 146 bn at the end of 2022. We expect public debt-to-GDP ratio to exceed 70% in 2021 and 2022. This will narrow fiscal policy space in coming years, even if Finland stays well below euro area average debt ratio," the bank's forecast read.