OECD ups Finland 2006 growth view on export boost
Nov 30, 2005. The Organisation for Economic Cooperation and Development (OECD) on Tuesday cut its 2005 growth forecast for Finland due to a labour dispute in the forestry sector, but said exports would drive growth in 2006.
Nov 30, 2005. /Lesprom Network/. The Organisation for Economic Cooperation and Development (OECD) on Tuesday cut its 2005 growth forecast for Finland due to a labour dispute in the forestry sector, but said exports would drive growth in 2006. Gross domestic product was seen rising 1.3% this year, versus a previous forecast for 2.2%, while next year's growth would be 3.3%, up from 2.9% seen in May.
"GDP growth in the second half of 2005 and into 2006 will recover strongly," the OECD said in its bi-annual report on the global economy. "The main risk to the outlook is that the upturn in world trade is weaker than expected."
The OECD was less optimistic for 2006 than many other major institutions. Finland's central bank in September gave a 3.7% growth forecast and think-tank ETLA saw 4.1% growth, although the government expects growth of 3.2%.
Finland's forestry sector, which accounts for around a quarter of the country's exports, was hit this year by employers locking out workers to force a new wage deal allowing mills to run over major holidays and the use of non-union labour.
The OECD said exports would become a more important growth factor than consumption in the future, with next year's growth helped by the electronics industry growing rapidly, while consumer spending would wane due to lower disposable income. "Finland's export markets will experience their most sustained pick-up since the end of the 1990s, because of the strong penetration of the fastest growing markets in Asia and Russia," it said. "On the other hand, growth in real disposable income will be squeezed between modest increases in nominal wages and rising consumer price inflation," the OECD added.