11/06/2013 09:14:00

Bank of Finland Warns of Structural Weaknesses, Aging Population

By Juhana Rossi

HELSINKI--Anemic economic growth caused by structural weaknesses combined with an aging population threaten to push Finland into a spiral of rising unemployment and public debt, the Bank of Finland warned Tuesday.

In a starkly worded biannual economic outlook, Finland's central bank said the Nordic country's public debt will continue to rise at least until 2015 as increasing unemployment and weak private consumption curtail tax revenue.

It forecast Finland's gross domestic product would shrink 0.8% this year, marking a second straight annual contraction. The outlook projects only a muted recovery as GDP is predicted to expand 0.7% in 2014 and 1.4% in 2015, highlighting gradually intensifying structural weaknesses in the economy.

"Problems in the economy that were previously thought to be temporary, cyclical phenomena have now been shown as more permanent and structural in nature," said Erkki Liikanen, governor of the Bank of Finland, in a preface to the outlook.

The unemployment rate is forecast to rise to 8.5% in 2013 and to 8.6% in 2014. Last year, the unemployment rate was 7.7%.

Elevated unemployment and nearly stagnant economic growth will put a strain on Finland's public finances despite the considerable budget consolidation measures carried out by the government in recent years, Mr. Liikanen said.

The Bank of Finland projects the country's public debt in relation to GDP will rise to 61.8% in 2015, exceeding the 60% debt-to-GDP ratio limit set for members of the European Monetary Union. Finland's debt-to-GDP ratio is expected to be 56.9% this year, up from 49.0% in 2011.

Along with rising public debt, the proportion of elderly people in Finland's population will expand, creating a "risk that Finland will drift onto a path of fading economic growth, persistently high unemployment and deteriorating public finances," Mr. Liikanen said.

The annual change in Finland's general price level is expected to trend downward. Finland's annual inflation rate will be 1.9% in 2014 and 1.7% in 2015, according to the Bank of Finland's projections. Inflation is forecast to be 2.3% in 2013, easing from 3.2% in 2012.

Mr. Liikanen is also a member of the European Central Bank's Governing Council. The council "will continue monitoring all incoming data very closely and stands ready to act," he said.

Write to Juhana Rossi at juhana.rossi@dowjones.com

(END) Dow Jones Newswires

June 11, 2013 04:14 ET (08:14 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.

Post comment

Related debate

  • 1 week
  • 1 month
  • 1 Year
27 Mar
OMXC20
  Det kan være næsten lige så vanedannende som narkotika og cigaretter at sidde dag efter dag og føl..
27
23 Mar
I:DAX
@marc55.   Lad mig give dig et velment råd.   Jeg er ikke en gammel sur mand (hverken gammel eller s..
19
26 Mar
 
Aktieugebrevet skriver:   Zealand Pharma kan stå foran stor værdiskabelse Zealand Pharma aktien har ..
17
22 Mar
OMXC25
Det var så vigtigt vi skulle stemme. Jeg er glad for det blev et NEJ.   EU sagde vi ikke ville få en..
17
28 Mar
BAVA
Regnearket er bygget op, på den måde, at det udregner Gak prisen løbende. I GAK prisen, er der altså..
16
23 Mar
VWS
Dong Energy og Vestas får meldinger om off shore industrien, hvor de store olieselskaber øjnene muli..
14
28 Mar
 
Nej. Det er derimod latterligt, at Uber skal være ulovligt i dette i forvejen over regulerede lortel..
13
28 Mar
 
Det var da på tide. De skulle aldrig have åbnet. Man kan da ikke starte et firma, der åbenlyst laver..
13
22 Mar
GEN
Genmab kommer minimum i kurs 2000 over tid - og hvad der sker i mellemtiden rager mig personligt en ..
13
24 Mar
DANSKE
Hr. Borgen og kongsmart sad i kantinen og så gårdsdagens nyheder i tv, da Der Tonede et indslag fre..
12

Form 8.3 - Bovis Homes Group Plc

28/03/2017 14:49:02
FORM 8.3 PUBLIC OPENING POSITION DISCLOSURE/DEALING DISCLOSURE BY A PERSON WITH INTERESTS IN RELEVANT SECURITIES REPRESENTING 1% OR MORE Rule 8.3 of the Takeover Code (the "Code") 1.         KEY INFORMATION (a) Full name of discloser: Unicredit SpA (b) Owner or controller of interests an..

Alliance Trust PLC : Net Asset Value(s)

28/03/2017 13:55:21
ALLIANCE TRUST PLC                                    At the close of business on Monday 27 March 2017: The Company's NAV per ordinary share, valued on a bid price basis with Debt at Par, was -       excluding income, 714.6p -       including income, 720.4p  The Company's NAV per ordinary share, valued on a bid price basis with Debt at Fair Value, was -       excluding income..

HSBC Bank Plc : Form 8.5 (EPT/RI) - Redrow PLC

28/03/2017 10:41:26
FORM 8.5 (EPT/RI) PUBLIC DEALING DISCLOSURE BY AN EXEMPT PRINCIPAL TRADER WITH RECOGNISED INTERMEDIARY STATUS DEALING IN A CLIENT-SERVING CAPACITY Rule 8.5 of the Takeover Code (the "Code") 1.         KEY INFORMATION (a) Name of exempt principal trader: HSBC BANK PLC (b) Name of offeror/offe..

Most read news

  • 24 hours
  • 48 hours
  • 1 week
1
SHAREHOLDER ALERT: Faruqi & Faruqi, LLP Encourages Investors Who Suffered Losses In Under Armour, Inc. To Contact The Firm
2
Ericsson presents focused business strategy
3
RigNet deploys its first deep water 4G LTE system in the Gulf of Mexico and announces dramatic capacity increases to its state-of-the-art licensed 4G wireless network
4
Ericsson simplifies organization and names Executive Team
5
PICO Holdings, Inc. to Webcast Annual Meeting of Shareholders on May 4th, 2017

Buy and sell signals

  • Trend
  • Moneymachine

Copyright Euroinvestor A/S 2017   Disclaimer and Terms of Use
Quote information is delivered by Interactive Data.
Data is delayed 15-20 minutes according to the distribution agreements set by the different exchanges.
 
29 March 2017 06:19:46
(UTC+00:00) Dublin, Edinburgh, Lisbon, London
Version: LiveBranchBuild_20170324.2 - EUROWEB4 - 2017-03-29 07:19:46 - 2017-03-29 06:19:46 - 1000 - Website: OKAY