Finland is almost in a depression “- Swedish Dagbladet

Finland is almost in a depression "- Swedish Dagbladet

According to Danske Bank’s forecast , which was presented on Thursday expected the Finnish GDP growth will be negative, it drops to 0.4 percent this year and grow by just 0.8 percent next year.

Domestic demand is fragile and household purchasing power is being squeezed by tax rises and high unemployment. While Finland is an export-dependent country, which like Sweden would benefit from increased global demand in order to get their exports. Finnish exports are also affected adversely by reduced demand from Russia, and its introduced sanctions.

– Finland is almost in a depression, it is not longer a question of a recession, said Roger Josefsson, chief economist at Danske Bank, to SvD Business.

This spring warned the rating agency Standard & amp; Poor’s to Finland’s credit rating may be lowered. The threat lingers.

– Now before you tax reform and it’s all about how well the politicians get government finances in order, said Roger Josefsson.

Finland also has a well-known demographic problems. The population is aging, and the proportion of working age is decreasing each year. Unlike Sweden, nor Finland had such a major immigration.

– Immigration helps the growth which the economy would be felt well off.

For Sweden Danske Bank forecasts GDP growth to land at 2.2 percent for this year and going up at 2.5 percent for 2015 Slow growth is related to an expected weak export growth.

For the Swedish economy it is crucial to the export industry gets up steam.

Without growth in the export sector, the scope for wage increases and increases in profits are limited. Inflation and inflation expectations are likely to get stuck at low levels, well below the Riksbank’s target, according to Roger Josefsson’s analysis.

Despite this, he estimates that the Riksbank has cut completely.

– I do not that there will be any more rate cut, given that the main features of our forecast falls into said Roger Josefsson.

Instead, he talks himself hot to the Riksbank could introduce a currency floor of the Crown, similar to the Swiss National Bank has put in place. It could be a tool to get to if not higher inflation.

– It is a measure that I think would have the best effect, and the Riksbank will not have problems with housing and household debt. They are completely outside of such a measure, said Roger Josefsson.

The great thing about a currency flooring is that it hits the sector that you want to affect, namely the export sector.

Roger Josefsson finds that he is more pessimistic today than a month ago in the development of Europe and recalls that ECB President Mario Draghi recently found that growth in the eurozone country has lost momentum.

Josefsson also points out that it is not the first time that hopes for improved growth been dashed, and economists have been forced to revise their forecasts. Central bank talk of higher interest rates in the near future have stayed at just numbers, but realized. Instead, the central banks are forced to do anything to stimulate the economy with a very expansionary monetary policy.

– Still not biting action. We believe that this is a long-term phenomenon, that we now have a long-term lower trend growth, said Roger Josefsson.