After several difficult years, Finland’s economy is finally moving in the right direction. As the Bank of Finland’s latest forecast confirms, economic growth has strengthened and become more broadly based.
The outlook is clearly brighter than it was just a few months ago. The economy is projected to grow by 1.7% this year and 1.6% in 2027.
All in all, growth forecasts for 2026 and 2027 have been revised upwards, despite the high oil prices caused by the conflict in Iran. After a prolonged period of weak growth and economic uncertainty, this represents a significant change in direction. Growth is being driven particularly by exports and private investment.
Goods exports, in particular, have performed strongly, supported by chemicals and pharmaceuticals, fuels and major industrial deliveries. New orders in manufacturing have also increased markedly, especially in the metals industry. Importantly, confidence in the industrial sector has strengthened.
Finnish companies build, for example, some of the world’s most spectacular cruise ships in Turku, produce pharmaceuticals for hundreds of millions of people, develop blockbuster mobile games and state-of-the-art satellite imaging technology, and manufacture high-quality mining equipment. Emerging Finnish technology companies include, for example, leading manufacturers in the field of quantum computing.
This positive development is not limited to a single industry. Turnover and production volumes have increased across all main sectors compared with last year. Productive investment has also increased, for example in machinery, equipment and data centres. Finland is well positioned to benefit from growing global demand for clean energy, advanced technology, defence and digital infrastructure.
This development is important because sustainable prosperity cannot be created through public spending alone. Prosperity is created by successful companies that invest, export, innovate and, above all, employ people. A thriving private sector is the foundation of higher employment, rising wages and well-funded public services.
There are also encouraging signs for Finnish households. Purchasing power has improved, households have substantial savings, and consumer confidence has risen to its highest level in more than four years. Private consumption is still recovering cautiously, but the conditions for stronger domestic demand have improved.
However, the economic recovery has not yet been fully reflected in the labour market. Unemployment unfortunately remains high, and the number of job vacancies is low. According to the latest forecasts, unemployment will gradually begin to decline as the economy strengthens.
The direction is right, but the slow recovery of the labour market shows that Finland must continue reforms that encourage work, entrepreneurship and investment. In international studies, Finland still ranks as one of the most inflexible labour markets in the OECD.
While the economy as a whole is clearly picking up, the public sector is still in a difficult situation. Public spending exceeds revenue by more than €10 billion annually. Economic growth alone will not solve the problems in Finland’s public finances.
Government finances remain structurally imbalanced, and public debt has risen to an unsustainable level, approaching 90% of GDP. The EU has set 60% of GDP as a reference value. An ageing population, rising expenditure and persistently weak productivity growth will continue to put pressure on public finances even as the economic cycle improves.
Finland must therefore continue balancing its public finances and reforming the public sector. This means prioritising expenditure, improving the productivity of public services and ensuring that taxpayers’ money is used efficiently. At the same time, we need reforms that increase the supply of labour, remove unnecessary regulation and improve the conditions for companies to grow.
Fiscal consolidation and growth policy must support one another. Finland cannot tax its way to sustainable public finances. Excessively high taxation would weaken purchasing power, reduce incentives to work and make Finland a less attractive place to invest. The sustainable solution lies in combining a stronger economy with a more efficient public sector.
The new parliamentary “debt brake” mechanism aims to establish a shared long-term target for sustainable fiscal policy. This historic agreement has increased confidence in the Finnish political system’s ability to tackle the large deficit. Prime Minister Petteri Orpo’s government has already begun implementing budget cuts and reforms – and these reforms must continue in the future.
Finland’s future looks brighter than it has in years. The Finnish public sector still needs a great deal of reform, but the work of making it leaner has begun.
A healthy nation and a competitive economy are built on a thriving private sector, and for many Finnish companies, the future is full of possibilities. This, in turn, will mean more opportunities for workers: higher employment and rising wages.
Finland is back on track!
