Finland’s recovery has hit an unexpected pause. The Research Institute of the Finnish Economy (Etla) has lowered its 2025 GDP growth forecast to just 0.8 percent, citing collapsing household consumption as the economy’s weakest link. Growth is expected to rebound to 1.4 percent in 2026.
Despite solid exports and a rebound in investment, net trade has failed to lift GDP, while consumer spending has now fallen for three consecutive years, dropping back to 2018 levels. “Export growth this year is strong, but largely driven by one-off factors such as cruise ship deliveries,” noted Etla forecast director Päivi Puonti, warning that net exports will not act as a growth driver.
Investment is turning positive again, with total investment seen rising 2.5 percent in 2025 and nearly 6 percent in 2026. Public investment remains robust, while private sector investment is recovering more slowly. Employment is also expected to improve: unemployment will average 9.3 percent this year before easing to 8.8 percent in 2026.
Inflation continues to moderate, with harmonized EU inflation metrics diverging temporarily due to interest rate costs, but Etla sees the difference narrowing by late 2026. Risks stem from international trade tensions, though household consumption could surprise on the upside if confidence rebounds.
The institute also warns Finland’s public deficit will remain above the EU’s 3 percent threshold until at least 2027, with debt projected to reach 88 percent of GDP.
The message is clear: Finland’s growth engine remains fragile, with household demand at the center of the challenge. Export tailwinds and stronger investment may help next year, but consumer confidence will decide how fast the recovery truly gathers pace.
Source: Etla, Etla lowers its 2025 growth forecast – household consumption now the weakest link, 17 Sept 2025etla.fi
