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(Bloomberg) -- Finland’s economic growth will slow more than previously estimated over the next three years, the central bank said, in an unwelcome sign for the new government that’s building its policy program on the back of economic growth.
The Nordic nation’s economy will expand 1.6% this year, with a gradual slowdown to 1.3% seen taking place by 2021, the Bank of Finland said on Tuesday. Uncertainty in the international economy reduces Finnish companies’ willingness to risk new investments, while demand for their goods outside the country will decline, the central bank warned.
But the news “is not all bad,” the central bank said. For instance, “the competitiveness of Finland’s export industries has improved, while low interest rates are supporting household consumption and corporate investment,” the Helsinki-based institution said.
While employment will continue to grow over the next few years, growth will be “much more sluggish,” just as Prime Minister Antti Rinne’s government, sworn in last week, said it targets raising the employment rate to 75% of working-age population from the current 72.6% level. Achieving that won’t be easy.
“The labor market has long suffered from a problem of matching job vacancies with unemployed workers, and this would appear to be set to continue to some degree in the immediate years ahead,” according to the central bank.
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