Here's what Finland's economic recovery means for you

The Finnish economy is showing signs of a long-awaited recovery, according to economists. This is evident in the growth of the country's gross domestic product and tax revenue. However, the impact on ordinary consumers, mortgage holders, and small investors remains unclear.

Economist Kaisa Kivipelto from Danske Bank explained that stock markets, which look ahead, have performed well since last year due to expectations, rather than current results. However, the Helsinki stock exchange is heavily weighted towards international companies whose earnings depend on European industry and global developments in China and the United States. Therefore, the Helsinki market tends to move more in line with global growth than Finland's economic fortunes.

The European Central Bank (ECB) has set interest rates that may have been too high for Finland's economy. Kivipelto noted that if Finland had its own central bank, interest rates would likely be lower. The ECB has already raised rates once this year and may do so again in September, likely due to external shocks such as the increase in oil prices.

Companies begin hiring when they have greater confidence in a positive growth outlook. Kivipelto stated that recruitment decisions are made carefully, often taking six months or more before a significant turnaround shows up in the labor market. This could mean that more job opportunities will start to appear in the near future.

The economic recovery has already been felt in workers' salaries, with wages rising by 19 percent since 2020 and expected to increase by more than three percent next year. Many goods have become relatively cheaper. Despite this, consumer sentiment remains gloomy due to global news and falling housing prices. As confidence returns and the economy strengthens, mortgage demand should pick up, but it does not necessarily mean house prices will rise.

The housing market has become more fragmented, with potential pockets of price increases in certain segments, particularly family-sized homes in cities. However, small apartments in larger cities may take longer to see a turnaround.

Higher interest rates and changes to housing benefits for students have dampened enthusiasm for buy-to-rent properties. There is a large stock of unsold homes on the market. According to the Finnish Commerce Federation, retail sales are expected to grow by more than two percent annually this year and next, reflecting Finns' increased means and willingness to spend. This is also evident in the declining high saving rate among households, indicating a return to spending habits.