Finland’s economy is finally edging out of stagnation, though the rebound will be slow and uneven. According to the Bank of Finland’s September interim forecast, GDP growth will reach just 0.3% in 2025 after a weak start to the year. Growth is projected to accelerate to 1.3% in 2026 and 1.7% in 2027, signalling that the recovery is gaining traction even if the pace remains modest.
The labour market, hit hard by the downturn, is expected to heal only gradually. Unemployment will climb to 9.4% this year, the highest in years, before easing to 8.6% by 2027 as the economy regains momentum. Despite the sluggish recovery, rising wages combined with slowing inflation will gradually restore household purchasing power.
Inflation itself remains under control. Consumer prices will rise 1.8% in 2025 and stay below the European Central Bank’s 2% target in the following years. While subdued demand and falling import prices are holding inflation down, service costs continue to climb above 2% as wage growth feeds through.
The forecast highlights a split economy. Exports and industrial investments are showing signs of strength, but weak consumer confidence and a frozen housing market remain heavy drags. Looser monetary policy has already lowered borrowing costs, offering support to investment, but households remain cautious.
Risks remain two-sided. Prolonged uncertainty in global trade and geopolitics could choke off the fragile recovery. On the upside, stronger external demand, rising defence spending and green transition investments could ignite faster growth than currently projected.
For now, the Bank of Finland’s message is clear: the worst is over, but Finland’s road back to solid growth will be a slow climb.
Source: Bank of Finland, September 2025 Interim Forecast – Economic growth starts with a sputter, 10 Sept 2025.
