The Finnish economy is doing fine…

We have new coalition government made up of a collection of very different political parties from Left to Right, which in Finland means more of the same without the neoliberals, the Conservatives, and nationalists, the True Finns….

In many ways the change is refreshing because government policies should always be more balanced than the last government, which was dominated by the far right where the bosses in the banks and big companies made the decisions to feather their own nests. Just look how the big companies and the very wealthy dominate policies when the “Neo-liberals” and “nationalists” march into power. They squeeze labour and the middle classes, they “privatise” profits and socialise losses.

So far the new government has only painted broad policy outlines, and that means that there are no exact figures yet to evaluate. These will come later during and after the summer.

But what we have today from Finland’s top-rated MoF economists (see above photo, Marjo Paavonen, Mikko Spolander, and Jukka Railavuo) is a conservative forecast where they have tried to calculate the costs and risks of their planned policies.

Their assumptions are the following:

  1. They expect growth to fall slightly in Finland and in the rest of Europe and in USA. Finnish GDP will fall from 2018’s 2%, to 1,7% this year followed by 1,6% and1,3% in the net 2 years but with the proviso that they really do not know what will happen…
  2. Finnish exports are expected to fall, and employment demand is expected to slow.
  3. They expect oil and other raw materials expected to continue to rise with interest rates staying low…
  4. A tighter labor market may see an increase of 3% in incomes, with inflation at around 2% which means that consumer demand will be reasonable.
  5. They are worried about productivity which has not been growing sufficiently, meaning that labor costs are slightly too high, but that should not be a problem because our competitors have the same problem.
  6. Trade wars will slow down growth… including Brexit… possible wars and climate change…
  7. Public sector’s financial position will start to weaken slightly – more public debt as percentage of GDP, and se have that ageing population problem, etc…
  8. The new government is expecting to see new permanent costs of some €3 billion, with income expected to come from tax increases and sale of some government-owned shares so that balanced budget by 2023 and employment rate 75%…

They warn that they do not expect any major economic downturns or upturns… the above is just based on ordinary economic development without shocks in either direction.

The fact that the new coalition has reached a broad consensus rather quickly is evidence of the realisation to act in the interests of the country rather than based on narrow interests. The slight downward adjustments in growth are tiny and are of no great significance. Finland is small enough to adjust to wider economic downturns and expand their market share of exports. We have always been doing this for decades, and our standard of living still ranks as one of the best, unlike our other countries in the western developed world.

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