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Finland Country Risk Report Q4 2018

Finland Country Risk Report Q4 2018

GDP growth will ease over the coming years, in line with a regional slowdown and structural constraints. Domestic demand will drive the expansion, while there will be headwinds from pre-election political uncertainty and threats to global trade from increase protectionism.

Recent above-trend growth has helped correct macroeconomic imbalances, but long-term sustainable growth hinges on the successful completion of reforms to enhance export competitiveness and to tackle the problems linked to a rapidly ageing population.

The government's flagship reform to healthcare, social services and regional governments faces more delays, reducing the likelihood that the package will be approved before the election due by Spring 2019. The setback could prompt early elections, though the broader impact would be greater uncertainty over the sustainability of public finances.

Major Forecast Changes

We have nudged up our short-term growth forecast for 2018 to 2.5%, from 2.3%, due to strong momentum at the start of the year and the announcement of new major investment projects.

Key Risks

A faster-than-expected deceleration in EU growth after Brexit would take a toll on European demand for Finnish exports, while US protectionist measures have increased risks to global trade.

Elevated household debt may prompt monetary authorities to impose new restrictions on bank lending, particularly for mortgages, curbing the growth in credit.


Executive Summary
Core Views
Major Forecast Changes
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic - SWOT Analysis
Political - SWOT Analysis
Economic Outlook
Economic Growth Outlook
Finland GDP Growth To Ease Gradually
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Outlook On External Position
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
TABLE: TOP FIVE EXPORT DESTINATIONS AND GOODS EXPORTS (2016)
TABLE: TOP FIVE IMPORT SOURCES AND GOODS IMPORTS (2016)
Monetary Policy Framework
ECB Dovish Despite End To QE
Structural Fiscal Position
TABLE: MAIN EXPENDITURE AND REVENUE CATEGORIES, 2015
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Currency Forecast
EUR: Strength Unlikely Despite Tighter Monetary Policy
TABLE: EUROZONE CURRENCY FORECAST
Finland Country Risk Q4 2018ContentsPolitical Outlook
Domestic Politics
Delays Threaten Finnish Government's Flagship Reform Plan
Long-Term Political Outlook
Economic Reforms Pose Significant Political Challenges
Global Macro Outlook
Pressure On EMs Grows, As Do Divergences
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: FINLAND – MACROECONOMIC DATA AND FORECASTS

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