HELSINKI, June 15 (Xinhua) -- The Bank of Finland on Tuesday projected rapid economic growth for the country in the next two years, but warned of a slowdown in 2023 as long-term challenges will start to kick in.
Finland's economy is expected to enter a period of brisk growth as the COVID-19 pandemic begins to ease, the bank said in a press release published on Tuesday. In 2021, the economy is projected by the bank to grow by 2.9 percent and in 2022 by 3.0 percent.
However, gross domestic product (GDP) growth in 2023 would drop to 1.3 percent, reflecting the longer-term challenges posed by an aging population and weak productivity growth.
Meri Obstbaum, head of forecasting at the bank, said that Finland's exports would reach pre-pandemic levels this year.
She added that the growth trend would be further boosted by the fact that most of the country's enterprises have survived the pandemic without much damage.
The recovery in the global economy, and particularly in the eurozone, would also boost demand for the goods and services exported by Finland, according to her.
The bank noted that the COVID crisis has placed a strain on the country's central and local governments, whose expenditures have grown substantially. At the same time, their tax revenues have declined.
Finland's general government debt would continue to grow between 2021 and 2023 to reach 73 percent relative to GDP by the end of this period, it predicted.
Inflation is forecasted to accelerate in Finland this year to 1.7 percent due to rising commodity prices and growing consumer demand. The acceleration in consumer price inflation would, however, be temporary.
"The greatest risks relate to the unpredictability of the COVID pandemic. It will not be over until it has been defeated everywhere in the world," Obstbaum said.
"Now would be the time to create more incentives for innovation," Bank of Finland Governor Olli Rehn told journalists on Tuesday.
Finland should increase the employment rate of elderly and young people, he suggested, adding that the country should continue to pursue structural reforms to enable continuous economic growth immediately after the recovery. Enditem