Finland: 2022 Article IV Consultation — Press Release; Staff Report; and Statement by the Executive Director for Finland
IMF Staff Country Reports, January 23, 2023
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- Finland: 2022 Article IV Consultation — Press Release; Staff Report; and Statement by the Executive Director for Finland
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Bibliographic details
- Published: January 23, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400232114.002
Economic outlook and near-term risks
- Economy recovered swiftly from the pandemic.
- Russia’s war in Ukraine has worsened the outlook through trade exposures and increases in energy prices.
- High inflation and rising interest rates are weighing on household purchasing power.
Structural challenges and medium-term constraints
- Long-standing structural challenges persist: adverse demographics and low productivity growth.
- Further measures to boost employment and productivity are key to growth and fiscal sustainability.
Financial sector resilience and vulnerabilities
- Finland has a large financial system; banks are well capitalized.
- Vulnerabilities identified:
- Susceptibility to liquidity shocks.
- Exposure to credit risks from other Nordic countries.
- High household debt raising systemic vulnerability.
- Recommendation: Strengthen liquidity buffers.
Macroprudential and regulatory policy recommendations
- When circumstances allow:
- Re-instate systemic buffers.
- Enhance cyclical tools by introducing a positive neutral rate for the countercyclical capital buffer.
- Legislative action: Enact a debt-to-income cap to address household finance vulnerabilities.
Labor market and wage-setting reforms
- Advance labor market reforms to boost employment and productivity.
- Make collective wage bargaining more flexible while strengthening the coordination mechanism to support adjustment to shocks.
International Monetary Fund, January 23, 2023.
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