Fri, 12 Dec, 2014 12:04:44 AM FTimes Rreport, Dec 12  Governor of the Bank of Finland Erkki Liikanen presented a forecast on Finnish economy at a press conference in Helsinki on Thursday. Photo – Lehtikuva. The Finnish economy is still performing very modestly and will start to recover only since 2016, according to the latest forecast of the Bank of Finland.
Global economy has grown more slowly than expected, observed the bank, adding that trade with Russia has contracted and productivity development remains weak.
Finnish exports have stalled and are lagging behind the pace of growth in the export markets. The outlook for the Finnish economy over the next few years has also continued to deteriorate. 
Governor Erkki Liikanen (left.) and Juha Kilponen of monetary Policy and Research Department at the press conference. Photo – Lehtikuva. According to the outlook, the Finnish GDP is expected to contract by 0.2 per cent in 2014 and by 0.1 per cent in 2015 and, after four years of unbroken contraction, the economy will grow at a sluggish 1 per cent in 2016, said the Bank of Finland.The bank also said the current geopolitical tensions have increased the downside risks to the forecast.
However, euro depreciation and the fall in oil price could lead to a faster-than-forecast growth.
The unemployment rate will remain at around 8.5 per cent and the number of people employed will continue to decline slowly in 2014 and 2015. In addition, the household purchasing power will not rise in the forecast period and private consumption will not grow until 2016. Finnish inflation will slow further in 2015, to 1 per cent due to declining commodity prices. Slow growth in labour costs and weak private consumption will also lower inflationary pressures. Inflation will accelerate to 1.4 per cent in 2016, as economic growth gathers pace. According to the Bank of Finland, weak developments in the economy will mean a continued substantial deficit in public finances and growing indebtedness. Public debt will exceed 63 per cent of GDP in 2016.
The general government structural deficit is moving away from the medium-term objective. The current account will continue to be in deficit.
To stabilise the situation, the Bank of Finland recommend structural reforms and fiscal consolidation.
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