Finland: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Finland

International Monetary Fund

No 2025/010, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2024 Article IV Consultation discusses that the Finnish economy is recovering from the 2023 recession, supported by easing inflation and real wage growth. Falling energy prices and weak domestic demand have temporarily reduced inflation below 2 percent. The economic recovery is expected to gain momentum in 2025, but downside risks, especially from abroad, remain elevated. The economic downturn and increases in expenditure are expected to drive the fiscal deficit to 3.7 percent in 2024, further increasing public debt. Banks are well capitalized and have sufficient liquidity to withstand all but the most severe shocks. Ambitious labor market reforms initiated in 2023 will continue to support employment as the economy recovers. However, there is potential to increase participation rates further, strengthen educational outcomes, and attract more high-skilled talent from abroad. While Finland performs well on many business and innovation metrics, deeper structural reforms are needed to raise productivity growth. Attention should be given to increasing the availability of risk capital, reducing barriers to entry into the services sector, and continuing to pursue the deepening of the EU’s single market.

Keywords: Ministry of Finance estimate; R&D expenditure; transparency policy; population growth boost housing demand; FIN-FSA favor; Finland's economy; strengthening growth momentum; Productivity; Fiscal stance; Baltics; Global (search for similar items in EconPapers)
Pages: 85
Date: 2025-01-21
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