Finland money

Bank of Finland sees slowing growth and soaring inflation

HELSINKI, June 21 (Reuters) – Finland’s economic growth will stall next year while inflation is expected to remain high as Russia’s war with Ukraine takes its toll, the Bank of Finland said on Tuesday.

The central bank now expects growth of 1.7% this year, still within the range of 0.5% to 2% it forecast in March, but expansion will slow to 0.5% in 2023, it said. she said in a statement.

Inflation in the Nordic nation is now estimated at 5.6% in 2022, above the 4% to 5% range previously provided before slowing to 2.4% in 2023, still above the European Central Bank’s 2% target for the 19-nation currency bloc.

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“Supply chain bottlenecks and high commodity prices are driving up inflation,” said Meri Obstbaum, head of forecasts at the Bank of Finland. “Inflation is expected to ease next year as the impact of energy prices wanes and supply chain disruptions should ease.”

Risks to the growth forecast, however, are on the downside and the actual outcome could be worse, the bank added.

“Growth in the Finnish economy could be lower than expected, particularly if disruptions in the availability of raw materials and goods persist and price pressures do not ease,” the bank said. “In the worst case, the entire eurozone could fall into recession.”

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Reporting by Anne Kauranen Writing by Balazs Koranyi Editing by Catherine Evans

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