Bank of Finland’s interim forecast: Positive track in Finland’s economy will continue
Growth in the Finnish economy has gathered pace, driven by exports and investment. Growth is projected to continue at a significantly brisker rate in the forecast period compared with earlier years. As the economy strengthens, the unemployment rate – which has remained high – will gradually start to fall. Inflation will be pushed up temporarily by energy prices, but the extent of this impact will primarily depend on the duration of energy supply disruptions.
Growth in economy will continue at brisker rate than previously estimated
The Finnish economy started the year in better shape than had been previously estimated, and the economy continued to grow during the first half of 2026, driven especially by exports and private investment. The growth projection for 2026 and 2027 has been revised upwards. The interim forecast shows that Finland’s gross domestic product (GDP) will increase by 1.7% in 2026, 1.6% in 2027 and 1.3% in 2028.
“The performance of the Finnish economy in the first part of the year was stronger than previously forecast. The increase in exports and investment is creating the conditions for more widespread growth,” says the Bank of Finland’s Head of Forecasting, Juuso Vanhala.
Uncertainty in inflation outlook
Inflation will rise to 2.4% for the full year 2026, due to higher energy prices caused by the conflict in the Middle East. The increase in energy prices is expected to be temporary, and the impact of this on other prices is anticipated to be moderate. Consequently, inflation will fall to 1.4% in 2027. With the economy improving, inflation will rise to 1.8% in 2028.
“The impact of energy prices on inflation is expected to be only temporary. But there is more uncertainty than usual about the inflation outlook, as a prolonged Middle East conflict could keep energy prices high for longer than forecast,” says Vanhala.
Unemployment will ease gradually
Growth in the economy has not yet brought any significant easing of the labour market. Labour demand is still low, and the number of job vacancies has remained low. Companies’ employment expectations have nevertheless picked up.
The unemployment rate for 2026 is projected to remain almost unchanged at 10.4%. As the economy strengthens, the demand for labour will start to grow, bringing the unemployment rate down to 9.8% in 2027. In 2028, the unemployment rate will decline further to 9.0%.
Risks surrounding the forecast are balanced
Growth in the Finnish economy could be higher than projected if the rise in corporate fixed investment outperforms the projection and if domestic consumption rises more briskly. The key uncertainty in the forecast is centred on the energy shock caused by the Iran conflict. If this shock grows stronger, it could lead to a broad weakening of the growth outlook for the economy.