Finland’s economic recovery is losing momentum after Swedbank lowered its 2026 GDP forecast from 1.2 percent to 0.9 percent, citing higher energy prices and weaker consumer confidence tied to the conflict in the Middle East.
The downgrade reflects what the bank describes as “a temporary interruption in the recovery” in its report published today. Inflation is now expected to reach 1.9 percent this year, 0.6 percentage points higher than Swedbank’s January forecast, as rising fuel and raw material costs spread through the economy. Consumer confidence weakened sharply in March and April, although sentiment among companies has remained relatively stable.
Despite the weaker outlook, Finland’s economy began the year on firmer footing than expected. Preliminary data showed GDP growing 0.9 percent in the first quarter compared with the previous quarter. Swedbank still expects domestic demand to support growth through 2026 and 2027.
Households are expected to regain some purchasing power as wages rise faster than inflation. Swedbank forecasts wage growth of 3.5 percent this year, helping offset higher living costs and supporting private consumption over time.
Investment activity remains one of the stronger areas of the economy. Deliveries of Finland’s new fighter jets, broader defense spending, and rapid growth in permits for transport and communications projects, particularly data centers, are expected to sustain investment levels. Housing construction, however, remains weak due to relatively high interest rates, with existing home prices forecast to fall 1 percent this year before recovering in 2027.
Finland’s long-term challenge remains public debt. The country’s debt ratio reached 88.5 percent of GDP last year, prompting parliament to approve a new fiscal “debt brake” that will take effect in 2027.
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