According to the OP Financial Group's chief economist Reijo Heiskanen, a mild recession is likely if the epidemic continues.
The Financial Group OP is lowering its forecast for Finland's economic growth this year. According to the new forecast, Finland's economic growth will remain exactly zero in the current year. Earlier, OP's economists predicted that Finland's GDP would grow by 0,5 per cent this year.
The OP's new forecast is based on the effects of the coronavirus epidemic, for example, problems in production chains and increased uncertainty. The problems caused to the production chains are greater than previously estimated, says the group.
The background of the forecast is based on a scenario where the economic growth of China and the rest of the world are slowing due to the virus. Reijo Heiskanen says that, as Finland depends a lot from the export market, it is among the biggest suffered countries in Europe from economic aftermath of coronavirus.
- If the epidemic will last for several quarters, at least a slight recession is likely, Heiskanen says of the situation in Finland.
- Recovery is also inalienable. If the Chinese economy returns to the previous trend, the Finnish economy may rapidly recover the following year.
Forecast for the next year remains unchanged at 0,5% for the time being.
The worst outlook for the Finnish economy if the coronavirus epidemic continues
The worst prospect for Finland would be a situation where China's economic growth will decline pointedly this year and will not return to its previous trend. Then the Finnish economy would fall into recession, from which it would not recover next year also. It would also reduce the employment rate.
Coronavirus begins to hit Finnish economy starting from Finnair airline
In Finland, this is already reflected in the Finnair airline, which plans to begin large layoffs due to the cancellation of flights caused by the epidemic.
Source: You can find the original text at Ilta - Sanomat website.
Published 04.03.2020, FINREPO