Finland’s economy to grow 0.7% this year, Bank of Finland forecasts

The Bank of Finland forecasts the country’s economy will grow by 0.7% in 2026, according to its latest economic outlook published Friday.

Growth is expected to accelerate to 1.2% next year and reach 1.4% in 2028. The recovery remains uncertain, with the Middle East conflict and resulting energy crisis casting a shadow by driving inflation higher.

Exports, investment, and private consumption are set to support growth. Investments in data centers, green transition, and defense industry are driving private sector spending, while housing construction recovers only slowly.

Inflation is projected to rise to 2.4% this year due to the energy crisis, before easing to 1.6% in 2027. The Bank of Finland expects energy price increases to be temporary.

Wage growth and improving employment are boosting consumption, though uncertainty and rising interest rates are tempering the outlook. The European Central Bank raised key rates by 0.25 percentage points on Thursday, bringing the deposit rate to 2.25%. Households are still expected to accumulate savings during the forecast period.

Export growth remains brisk but faces geopolitical risks. Global demand for AI and data centers is supporting Finland’s exports, according to Juuso Vanhala, the Bank of Finland’s head of forecasting.