Economists Should Not Be Allowed to Predict 

The matter of the future of the economy here in Finland or in any other country is always a matter of making predictions. The most important prediction if what will happen to GDP in the coming year.

One would think that highly-paid bank economists and those economist working at the Confederation of Finnish Industry would be able to give the right number 12 months ahead for GDP growth or its fall.

They are meant to be the best in the market and are able to command a monthly salary that makes a normal worker’s head spin.

Your correspondent looked at these predictions made in 2020 about growth and surprise, surprise they were so far wrong that one must wonder why they too were asleep at the helm. 

In June 2020 the consensus of banking economists was something like this – recall that the expectation for 2021 is now 4%! 

Six months later in December 2020 the figures were still 2,2% for 2021, 2,5% for 2022 and  1,5% for 2023.

… and just to make sure that you do not believe they only got this wrong – most of them forecast -6% fall in GDP for 2020 with the final fall being a lower -3,4%… 

Whatever prediction is being made, most of us understand that interest rates will certainly increase because inflation, the stock market and real estate values are at high levels. These asset values can go higher too, but the risk of a fall is always greater especially when banks and big companies are demanding taxpayers’ cash when markets are red hot.

Recall 2007…

Photo: Joel Rouse (Ministry of Defence)

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