PUBLISHED January 19, 2026
According to a publication hosted in the Valtioneuvoston julkaisuarkisto Valto on Valtioneuvosto.fi, Finland’s “Winter 2025” economic review from the Ministry of Finance reports that the nation’s recovery after recent downturns has lost momentum in 2025. Gross domestic product (GDP) is forecast to grow by only 0.2 % this year, slowed by weak internal demand. Households have been cautious in their spending, even as incomes rise slightly. Construction has not rebounded yet, awaiting clearer signs in the housing market. Global and domestic uncertainties have dampened consumer confidence. External trade has been resilient, but it is not currently driving growth. These trends have kept Finland’s output well below potential.
The Ministry expects GDP expansion to strengthen gradually, with +1.1 % in 2026, +1.7 % in 2027 and +1.6 % in 2028. Household purchasing power is projected to improve as employment recovers and tax cuts take effect. Inflation is forecast to remain moderate and below the euro-area average. Investment activity is seen as having bottomed out, offering potential for future growth.
Spending linked to the energy transition is expected to support investment. Defense procurement is also anticipated to boost investment in the medium term. Employment is forecast to rise modestly as economic conditions strengthen.
Despite the gradual recovery, public finances remain under pressure. The government deficit is projected to shrink slightly in 2025 but widen again in 2026 due to delayed fighter-jet accounting. Long-term forecast shows deficits above 3.5 % of GDP through 2030. Public debt is expected to rise above 96 % of GDP by 2030. This trend undermines one of the government’s core targets to stabilize debt by 2027. Rising interest and defense spending are among the structural cost pressures. Policymakers face the challenge of balancing growth with fiscal sustainability.
Finland’s GDP growth in 2025 is projected at just 0.2 percent, reflecting subdued household spending and lackluster internal demand. Despite income growth, consumption has remained flat as consumers delay purchases amid uncertainty. The construction sector’s recovery lags behind broader economic improvements because the housing market has not yet shown convincing signs of resurgence. These domestic weaknesses have kept output below long-term potential and dampened momentum even as external conditions improve.
Finland’s GDP growth in 2025 is projected at just 0.2 percent, reflecting subdued household spending and lackluster internal demand. Despite income growth, consumption has remained flat as consumers delay purchases amid uncertainty. The construction sector’s recovery lags behind broader economic improvements because the housing market has not yet shown convincing signs of resurgence. These domestic weaknesses have kept output below long-term potential and dampened momentum even as external conditions improve.
The Ministry of Finance expects economic growth to strengthen gradually after 2025. GDP is forecast to rise to 1.1 percent in 2026, followed by 1.7 percent in 2027 and 1.6 percent in 2028. This points to a slow but steady recovery rather than a sharp rebound. Household purchasing power is set to improve as employment increases, wages grow and tax relief measures take effect. Inflation is expected to remain moderate, supporting real incomes and encouraging cautious growth in consumption. Investment activity appears to have bottomed out. Projects related to the energy transition and rising defense spending are likely to support future investment, while improved confidence could gradually lift private-sector activity.
Public finances remain under pressure despite the improving outlook. The government deficit is expected to narrow slightly in 2025 but widen again in 2026 due to delayed defense purchases, before easing gradually. In the longer term, deficits are projected to stay above 3.5 percent of GDP, while public debt is forecast to exceed 96 percent of GDP by 2030. This makes it difficult to achieve the government’s goal of stabilizing debt by 2027. Structural factors add to the challenge. An aging population and modest productivity growth limit long-term economic potential, forcing policymakers to balance short-term recovery support with fiscal sustainability.
Finland’s economic recovery has been delayed, with minimal growth in 2025 and weak domestic demand holding back broader expansion. Forecasts project gradual strengthening through 2026–2028, supported by rising employment, moderate inflation and renewed investment. However, persistent fiscal pressures and high debt levels will require careful policy action to achieve sustainable long-term growth and financial stability.
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