Economic growth will gather speed, but the general government deficit will remain high

The Finnish economy has been growing more rapidly than expected, and growth will continue throughout the outlook period. However, according to the economic forecast published by the Finnish Ministry of Finance on 21 September, the upturn will not be sufficient to correct the structural imbalance affecting general government finances.

Gross domestic product (GDP) is expected to grow by 1.6 per cent in 2026, 1.8 per cent in 2027 and 1.5 per cent in 2028. Revised figures published in June also led to more upbeat estimates of economic growth and work productivity in 2024 and 2025. The economic recovery is reflected in many sectors of the economy, and the outlook has brightened in both companies and households.

Despite the more rapid growth, the picture of the Finnish economy is not uniformly positive. The number of employed persons is still declining, and there are no signs yet of any recovery in the housing market and housing construction.

“It would seem that the brake that prevented demand and output growing last year has lost some of its effect, and the prerequisites for genuine economic growth are now in place. At the same time, the upturn in general government finances is expected to remain weak because the economic recovery will be insufficient to correct the structural imbalance in general government finances,” says Director General Mikko Spolander.

The forecast has been prepared for the Government’s budget session, and it therefore does not contain any details of Google’s data centre projects, which would boost investments even more than projected in 2027 and 2028. At the same time, oil prices are now substantially higher than assumed in the forecast,  which will have a negative impact on growth this year and in 2027.  The positive risks of the forecast are primarily associated with faster-than-expected growth in domestic demand. Negative risks are associated with weaker-than-expected growth in the global economy.