20220130-IMF-Finland_2021_Article_IV_Consultation-Press_Release_Staff_Report_and_Statement_by_the_Executive_Director_for_Finland_74页_1mb

Economic Outlook: Finland experienced a strong recovery in 2021, with GDP returning to pre-pandemic levels, driven by robust domestic demand supported by fiscal stimulus and a successful COVID-19 containment strategy. Growth is expected to moderate in 2022, with medium-term prospects constrained by demographics and productivity gains. Headline inflation rose in 2021 due to global raw material price increases and supply chain bottlenecks, but inflation expectations remain anchored.

Fiscal Policy: Authorities agree that a moderately faster consolidation over the medium term is needed to stabilize public debt, with a focus on expenditure reductions. The government aims to stabilize debt by the mid-decade, supported by employment gains. Contingent liabilities pose risks, and policymakers are reviewing state guarantees. Fiscal credibility would be enhanced by resuming respect for the spending limits system.

Structural Reforms: Finland is prioritizing reforms to boost employment and productivity, including measures to encourage labor market participation among women and older workers, improve education, and address skill shortages. Challenges remain in harmonizing wage bargaining and increasing R&D spending to align with productivity gains.

Climate Policies: Finland's net-zero emissions target by 2035 requires stronger climate policies, including carbon pricing and fiscal incentives. Authorities agree more action is needed but seek further analysis to ensure measures are socially equitable and sectorally coordinated.

Financial Sector: Finland's banking system remains resilient, but vulnerabilities include high household debt, regional interconnectedness, and climate-related risks. Authorities support enhanced macroprudential tools, such as a positive neutral countercyclical capital buffer, to address these challenges and improve financial stability.