Finnish Economy To Face Recession Of 0.2% In 2023 - Bank Of Finland

Finnish economy is hibernating and will contract by 0.2% this year, an interim forecast released by the Bank of Finland on Friday said

HELSINKI (UrduPoint News / Sputnik - 17th March, 2023) Finnish economy is hibernating and will contract by 0.2% this year, an interim forecast released by the Bank of Finland on Friday said.

"The economy will contract by 0.2% in 2023, according to the interim forecast. Growth will then be at a fairly weak level in the immediate years ahead, as the forecast assumes interest rates will remain elevated and no quick recovery is expected in the demand for Finnish exports," the bank said in a statement.

The Finnish economy gained 2.1% in 2022 due to a strong start that year, but the Ukrainian conflict and energy crisis reversed the trend, the bank said.

"The economy's performance will continue to be very weak in 2023 ... It takes time for the full effects of uncommonly high inflation and the substantial rise in interest rates to be felt in the economy. The recession is expected to be short-lived and shallow, however," it added.

In 2022, inflation in Finland gained momentum. After prices for energy carriers dropped by the end of the year, the pressure on the prices is expected to ease, according to the bank. The forecast projects inflation at 4.6% in 2023. The growth of the prices will further slow down and inflation will return back to below 2% again in 2024, the bank said.