Danske Bank has raised its forecast for economic growth this year, saying that the economy is set to grow by 1.2 percent in 2016—an increase of 0.5 of a percentage point on the figure they announced in their last forecast, in March.
The bank’s forecast says that the economy will grow by 1.3 percentage points in 2017, up 0.2 of a percentage point on the figure given in March. That is more optimistic than the Bank of Finland, which last week forecast growth of 1.1 percent both this year and next.
Better trade figures and expectations of an uptick in exports are behind the newfound optimism, which comes after employers and unions finally agreed a pact to raise competitiveness by cutting unit labour costs.
"Although the pact isn’t quite in line with the government’s initial targets, it can in any case be a historic internal devaluation," said the bank’s chief economist Pasi Kuoppamäki.
Kuoppamäki was particularly pleased about an increase in employment in the private sector. The bank forecasts a dip in unemployment below the nine percent mark, and says that those with debts will avoid unnecessary pain as interest rates look set to stay low.
The bank’s economist Henna Mikkonen says that the UK referendum on EU membership is nevertheless a risk to Finnish economic prospects, particularly for the exporting industries.