HELSINKI, June 27 (Xinhua) -- The Finnish economy is projected to grow at an annual rate of 1.1 percent over the next 20 years, according to a review published by the business think tank ETLA Economic Research on Tuesday.
"Such a long-term forecast will undoubtedly present developments that we cannot yet see in 2023. Based on the current view, however, growth will continue to be frustratingly slow," said Sakari Lahdemaki, a researcher at ETLA.
As in other developed nations, economic growth in Finland has slowed in recent years, primarily due to a decline in productivity growth and a decrease in the working-age population. Finland's long-term economic prospects are greatly influenced by global economic trends, ETLA said.
Productivity growth in the industrial and high-productivity service sectors is expected to be around 2 percent per year in the future. However, productivity growth in public services will lag behind other sectors, ETLA predicts. As the demand for public services increases, it will hinder the overall productivity growth of the economy over the next two decades.
ETLA researcher Ville Kaitila said that the projected productivity growth rate is slightly higher than the average rate since the financial crisis. The assumption is that productivity development in public services will improve. However, Kaitila pointed out that if this improvement does not occur, there may be a greater need for labor in the sector, resulting in slower GDP growth than predicted in the forecast.
One factor contributing to overall productivity growth is research and development (R&D) activities. ETLA predicts that R&D intensity will increase to an average of 3 percent between 2023 and 2033. Meanwhile, in the period from 2033 to 2043, R&D intensity is estimated to increase by an additional half a percentage point. However, the forecast states that even with supportive political measures, the growth rate will remain modest.
