HELSINKI, Aug. 20 (Xinhua) -- The Finnish economy will contract by 4 percent this year and rebound to a 3-percent growth in 2021, predicted OP Financial Group, one of the largest financial companies in Finland, in a press release issued on Thursday.
The forecast is more optimistic than in May, when OP estimated that the Finnish economy would contract by 6 percent this year, and would grow by 3.5 percent next year.
The financial group attributed the positive trend primarily to the rebound in private spending, the moderate increase of unemployment, and recovery of the global economy.
OP's payment card data showed that spending has recovered quickly between March and April, and private spending rebounded already in May and June.
Therefore, OP's economists estimated that the economy will remarkably pick up in the third quarter. The bottoming of export is expected also in the third quarter.
However, the investment cycle is more gentle than both spending and export. Some sectors will suffer from the COVID-19 pandemic for a long time.
Reijo Heiskanen, chief economist at OP, said that both the downturn in the spring and the rebound that followed were less severe in the Finnish economy than in other economies.
Due to the epidemic, lay-offs in Finland surged in the spring but have fallen to a third of the peak since then, said the financial group. It forecasted that the unemployment rate for this year and next year will be 7.5 percent, which is only 0.8 percentage points higher than last year.
Because of the consequences of the COVID-19 pandemic, the global economy shrank into a deep recession in the spring, but started to recover soon after the cliffy drop in the second quarter of this year.
OP's economists predicted that the recovery will slow down following the rebound, and the global economy will not reach the previous growth trend next year. Heiskanen suggested that to balance public finances, it is crucial to boost investment in the competitiveness and productivity of the export sector and to encourage employment. Enditem