Finland is a great country to live in and this is certainly true when you think about Helsinki more closely. Not only is it a safe, enjoyable place to spend time, but there is so much to do here. You not only have lots of great public spaces to check out but also masses of shops, bars, cafes and restaurants as well.
In terms of entertainment, the city also has a lot to offer.
From slot games to sports and a vibrant music scene, the choice is endless. Anyone who calls Finland home though knows this is only possible due to the country’s traditionally stable economy. Recent times though have brought choppy waters to the Finnish economic outlook – but what might be in store for 2023?
2023 could be tough for Finland’s economy
Looking ahead to 2023, it already seems that many people are predicting a tough time for the Finnish economy. This may come as a surprise to some people in the country, as Finland’s economy had been expected to grow by around 2.5% in 2022.
It may also raise eyebrows because initial forecasts for 2023 at the start of this year were predicting an economic growth of around 1.5%. The Ministry of Finance though has recently announced that Finland’s economy is predicted to grow by just 0.5% in 2023
But why could the coming 12 months lead to this situation?
High inflation and rising interest rates
One of the main dangers to Finland’s economic outlook for 2023 appears to be rising interest rates and continued high inflation.
Expected high levels of inflation will hit consumer purchasing power in Finland, as people get less for their money. With the Nordea Bank predicting that prices could rise five times more than income within the country through 2023, the reality of what may be in store is clear.
Rising interest rates on home loans are also a real danger to Finland’s economic outlook in 2023. This is because it will result in people paying more on home loans and having less to spend elsewhere in Finland’s economy. With more European Central Bank interest rate rises seemingly on the cards this is something to look out for.
Euro energy crisis an ongoing issue
Everyone around Helsinki knows that Europe has a problem with its energy currently. The ongoing war in Ukraine and the damage to the Nordstream pipes have not only led to problems with energy supplies across the continent but also to rising energy prices.
As this war rumbles on, it seems fairly certain that the energy crisis is something which will impact Finland’s economic outlook in 2023. This is naturally in a personal sense, where expensive energy will see rising household bills and leave people with less money to spend elsewhere. The European energy crisis though is also likely to be an issue for the business sector in Finland during 2023.
Rising energy costs could make it harder for Finnish businesses to operate in the coming year and result in them not being able to produce goods or simply keep the lights on. If this were to see lots of businesses in Finland shut down, the impact on the whole economy would be huge.
Not all doom and gloom in 2023
Although the above does show some issues for Finland’s economy in 2023, it is not all doom and gloom. After all, the country’s economy performed better than expected in the early stages of 2022 – and you cannot rule out this happening again.
Tourism could help the nation’s economy remain stable and bring in much needed revenue. As more people begin to discover what Finland has to offer as a holiday destination in 2023, more visitors could arrive to give the country’s economy a real boost.
You also need to look at Finland’s relatively high employment rate, which was reported to be 74.20% in August 2022, and see that as a reason for optimism moving forward. Recent investments made in the green energy sector could also spell better times than expected for the nation’s economy in 2023. If the country’s wind power capacity increases and the Olkiluoto 3 nuclear reactor opens in December 2022 as planned, this could help lessen the energy crisis – and boost the Finnish economy.
What could 2023 bring for Finland’s economy?
The simple truth is that making any concrete economic predictions for the future is fraught with danger. It does seem though that 2023 could be a period when Finland does not see much economic growth and instead focuses on remaining stable. However, with an economic growth of 1.4% predicted for 2024 by the Ministry of Finance, there is hope for the future.
HT