Finland's economy is projected to enter a moderate recession within the next 12 months, according to a recent forecast.
In its forecast, the OP Financial Group (OP), one of the largest financial companies in Finland, said Scandinavian country's economy is expected to contract by 0.3 per cent in 2023 and remain stagnant in 2024, reports Xinhua news agency.
OP Financial Group is made up of 106 OP cooperative banks and the central cooperative which they own, including its subsidiaries and affiliated entities.
Its previous forecast predicted economy to grow by 0.3 per cent in 2024.
In a statement on Tuesday, the OP Financial Group said that construction and company profitability are heading for a sharp downturn, and investment outlooks remain bleak for this year and the next.
Additionally, exports are expected to decline both this year and the next, as growth in export markets slows down, it added.
Improvements in household income will not be sufficient to offset the impact of depleted savings and higher interest rates. Consequently, household consumption will not increase over the coming year, the forecast said.
"The Finnish economy has been moving towards a mild recession, but at a pace that can be described as a soft landing. Unfortunately, after this downturn, the economy faces an unstable foundation and a high degree of uncertainty," said Reijo Heiskanen, chief economist at OP.
Heiskanen added that the economy continues to face exceptional risks and will take years to recover from the challenges it has experienced in recent years.
In June, the Ministry of Finance stated in its Economic Survey that economy would not grow this year due to rising prices and interest rates, which are reducing household consumption and investment.
The country's GDP was projected to grow by 1.4 per cent in 2024.
ALSO READ | Chinese army constructing bunkers, tunnels at Aksai Chin: Reports
ALSO READ | 'Drone strike' in Russia 'damages' four heavy transport planes
