Iran conflict’s impact on Finnish industry expected to remain limited

Finnish manufacturing will continue to grow this year, with expansion also spreading to construction and services, according to a new sector-specific forecast by the Research Institute of the Finnish Economy (Etla). While tensions in the Persian Gulf create uncertainty, the institute expects the conflict in Iran to have only modest effects on Finnish industry.

Etla’s spring forecast projects Finland’s GDP to grow by 1% in 2024 and 1.5% in 2025, with industry-driven growth continuing through 2028. Manufacturing output is expected to rise by around 2% annually, supported by strong export demand and competitiveness. Employment in the sector is also set to increase.

The war in Iran has driven up energy prices, weakening economic growth in the EU—particularly in Germany—and potentially dampening demand for Finnish exports. However, Etla’s senior researcher Sakari Lähdemäki stated in a release that the overall impact is likely to stay small.

Outlooks vary across industries. Shipbuilding and metal production show strong prospects, while chemicals and forestry face weaker conditions. Construction value-added growth is forecast to resume after a prolonged slump, though high real interest rates and conflict-related uncertainty may delay new housing projects.

Private services are expected to see value-added growth of 1.6% this year, led by retail, finance, and business support services. Rising fuel costs from the Iran conflict will pressure transport and logistics profitability, with Etla predicting a slight decline in the sector’s value-added this year before a modest recovery in 2025.