Economic Survey Autumn 2013
|Aihe:||Economic Survey, Autumn 2013|| |
|ISBN-13:||978- 952-251-490-5|| |
|Julkaisusarja ja -numero:||22c/2013|| |
|Osasto:||Taloudelliset katsaukset|| |
|Saatavuus:||Juvenes Print|| |
|Tekijäorganisaatio:||Ministry of Finance|| |
The euro area will come out of recession this year. However growth will remain slow because of low employment
levels, balance sheet adjustments in both the household and public sector, and persistently low competitiveness.
The financial and debt crisis has eroded the euro area’s growth potential. The US economy is continuing on its
path of slow recovery. World trade growth remains exceptionally sluggish.
Finnish GDP will contract by 0.5% in the current year. It is projected that the economy will only return to a
slow growth track towards the end of the year. In 2014 GDP growth will edge up to 1.2% on the back of domestic
consumption and exports. Growth will be bolstered by gradual recovery in the euro area, accelerating export
demand and continued low interest rates. In 2015 it is predicted that growth will reach around 2% and be more
broadly based than before. In the last years of the outlook period the GDP growth rate will exceed potential output
growth, despite the historically sluggish rate of economic growth. The economy’s growth potential is low because
labour input is stagnant, restructuring has destroyed existing production capacity, and there is very little
investment in new production capacity.
Sluggishness in the domestic economy has been reflected in consumer prices, and there has also been little
upward price pressure from the international raw materials markets. This year’s average projected inflation rate
is 1.6% and next year’s 2.1%. In both years increased indirect taxes will push up prices by 0.6 percentage points.
The unemployment rate will rise to 8.3% this year and only drop below 8% towards the end of the outlook period.
Unemployment will fall only slowly due to sluggish economic growth and mismatch problems in the labour
The general government budgetary position is inevitably affected by the fact that GDP growth has been in
negative territory for two consecutive years: public finances will remain in deficit over the coming years. Central
government and local authorities are clearly in deficit, the earnings-related pension sector shows a surplus and
other social security funds are close to balance.
Public debt will rise both in nominal terms and in relation to GDP, and next year the debt ratio will exceed
60%. Public debt threatens to continue to increase in the medium term. Public expenditure to GDP is set to climb
to its highest level in 15 years.