Business Environment

Business Environment

A rapid upswing in the Finnish economy is forecast as the coronavirus pandemic eases on the back of vaccinations. The economy will grow by 2.9 per cent in 2021 and 3.0 per cent in 2022. This economic growth spurt will be boosted by household consumption, with global growth supporting exports. The unpredictability of the pandemic is the most significant risk factor for weaker development. (Source: Bank of Finland)

Urbanisation is continuing in Finland and the population shift is maintaining demand for both housing and commercial construction, especially in growth centres. New construction is forecast to contract by two per cent during the year, and will focus on growth centres. Construction material prices have risen during the first half of the year. (Source: Confederation of Finnish Construction Industries RT)

The construction of an estimated 37,000 residential units will begin during 2021 and housing production will remain at a historically good level. Next year, the number of start-ups is expected to fall to 34,000 residential units. Low interest rates are supporting demand among both investors and consumers, and regional disparities are continuing to form. Although commercial construction will slow during 2021, public construction will remain at a good level. Slight growth is expected in the construction of all kinds of commercial premises next year. (Source: Confederation of Finnish Construction Industries RT)

The coronavirus pandemic has contributed to the polarisation of the real estate market. Investors are primarily interested in targets with strong cash flows, such as housing, logistics and community properties. Foreign investors, as well as both Finnish and international funds, are continually increasing their market share alongside Finnish institutional investors. (Source: KTI/Newsec)

Forecasts for the Russian economy have improved since last autumn. These positive developments have been influenced by the trend in the price of oil and the impacts of the coronavirus pandemic being less than expected. An upswing is forecast in Russia’s GDP, with growth of 3-4 per cent in 2021 and 2022. (Source: Bank of Finland/Bofit)

Half-Year Financial Report 1-6/2021, 2 July 2021