2004-12-15
Tapiola Group’s Senior Economist Jari Järvinen forecasts that the global economic growth will slacken due to the weak dollar and high oil price. Thus, also the economic growth in Finland is deteriorating. This year, the economic growth in Finland will remain at 3.1 percent, but next year it will slow down to 2.7 percent. For employees and entrepreneurs this means increased uncertainty, which may decrease consumption and postpone investment decisions.
According to Järvinen, the government’s tax cuts are a step in the right direction, but nevertheless deficient. Yet, combined with the incomes policy agreement, the cuts stabilize the economy. Järvinen forecasts that the unemployment rate will decrease to 8.8 percent next year.
The high oil price and weak dollar keep the interest rates low. However, it is advisable to prepare for a slight increase in interest rates. No sudden changes are expected on the housing market.
The inflation in Finland remains slow and increases to 1.7 percent next year. The inflation cuts the purchasing power, but also decreases the real interest rates. Thus, savers should consider investing in objects more profitable than checking accounts.
The complete review is published in Finnish at the address www.tapiola.fi/suhdannekatsaus.