Finnish Finance Ministry improves economic forecast, warns of impact of possible second wave

Source: Xinhua| 2020-10-05 19:07:06|Editor: huaxia

HELSINKI, Oct. 5 (Xinhua) -- The Finnish Finance Ministry has improved its predictions about the country's economy, but warns about the impact of a possible second wave of COVID-19, according to a survey of the ministry published on Monday.

In the survey, the ministry reduced its prediction for a GDP decline for 2020 to 4.5 percent from a 6-percent prediction made in July. The ministry forecast a 2.6-percent growth for 2021 and a 1.7-percent growth for 2022.

Talking at a government press conference on Monday, Mikko Spolander, a director general at the ministry, expressed concerns about the current rise of COVID-19 infections in Finland. He noted that much of the current Finnish economic recovery has been based on consumer demand, and "fear is seen already in some indicators". Exports and industrial production are not predicted to turn into growth until in 2021.

"The risks are now tangible," said Spolander, noting that the survey had been titled "a turning point," which now may go either way. The new predictions were done based on the assumption that no new major restrictions on society would be imposed.

In the global economy, the Finnish Finance Ministry predicted a 6-percent decline this year and a 5.5-percent growth next year.

The world trade would decline 10 percent for this full year despite its switch to a growth path in June, according to the survey, which predicted a 6.5-percent growth in world trade for next year.

Jukka Railavo, senior financial adviser at the ministry, underlined at the press conference that "China will start leading the world economy with its strong growth in exports," but China would also "need customers" and this means that other economies should pick up as well.

The ministry predicted growth for all the continents next year, but in China the growth is taking place already this year, noted Railavo.

On the long-term prospects for the Finnish economy, Smolander said that COVID-19 intensified the problems of the Finnish public economy. "It is crucial how Finland will respond later to the problems caused by the aging population structure," he said, adding that currently Finland's ability to create new production and income is not sufficient, and the public sector is not efficient enough, to produce enough revenue to offer the services of the welfare state for the generations to come.

To solve its problems, Finland should be able to benefit from the economic opportunities offered by global developments in fields such as climate change, Smolander said. Enditem