The Finnish economy is set to grow by 1.6% in 2025 and 1.7% in 2026 after a projected contraction of 0.3% in 2024. Declining interest rates are set to support private consumption and investment. Headline inflation is projected to rise gradually from low levels. Exports and imports will pick up modestly, in line with the gradual recovery in demand from key trading partners. The unemployment rate continued to rise in 2024, mainly reflecting weakness in the construction sector, but is expected to decline as growth strengthens. Escalating geopolitical tensions with Russia remain a key risk to investor confidence and trade.
Fiscal consolidation is crucial to put rising public debt on a downward path, including by increasing the efficiency of spending on health and other well-being services and normalising reduced VAT rates once a robust economic recovery is underway. Strengthening R&D investment, enhancing higher education participation and skills through more effective allocation of study places, and improving the integration of foreign talent will be key to boosting innovation and productivity. Further investment in renewable energy and more proactive forest management will be vital to meet Finland’s carbon neutrality target by 2035.