Economic Survey October 2011
|Aihe:||Economic Survey, October 2011|| |
|ISBN-13:||978- 952-251-255-0|| |
|Julkaisusarja ja -numero:||Ministry of Finance publications 36c/2011|| |
|Osasto:||Economics Department|| |
|Tekijäorganisaatio:||Ministry of Finance, October 2011|| |
The global economy has peaked. Economic uncertainty has increased during the summer and cast a
shadow over the future prospects of the international and the Finnish economy. In the current year, it
is expected that the Finnish economy will still show reasonable growth driven by domestic demand.
Exports will also continue to support economic growth, although to a lesser extent than before. Next
year will see a slowdown in economic growth, on the one hand because of sluggish export demand and
on the other hand because of reduced investment propensity in the climate of uncertainty. Due to the
low levels of economic activity it is expected that unemployment will fall only slowly. The rise in consumer
prices will remain at over 3% this year and next.
In 2011 the general government budgetary position will be improved by the recovery of economic
growth, increased indirect tax rates and the discontinuation of stimulus measures. Nonetheless the
substantial deficit in central government finances means that general government will continue to remain
The adjustment measures adopted by the Government will improve central government’s budgetary
position from 2012 onwards. However these measures are not alone enough to restore budgetary
balance because population ageing will increasingly slow the growth of general government’s financial
base in the next few years. In 2015 the deficit in central government will still stand at 2.8% of GDP. Local
government finances will become tighter as a result of cuts in central government transfers to local government.
Despite increases to municipal tax rates and efforts to curb expenditure growth, the budgetary
position of local governments will weaken. The surplus in earnings-related pension funds will narrow
somewhat following the growth of pension expenditure. Nonetheless in the medium term their surplus
will remain close to 3% of GDP.
Since central government and local government finances will remain in deficit, general government
indebtedness will continue to increase over the outlook period. By 2015 the general government debt
to GDP ratio will have reached 53.5%.