A team from the International Monetary Fund (IMF), led by Alex Pienkowski, visited Helsinki and Tampere between October 28 and November 7 for the 2026 Article IV Consultation. The IMF staff met with Minister of Finance Riikka Purra, Governor Olli Rehn, other senior officials, and representatives from various sectors including banks, labor unions, and private businesses.
According to the IMF staff’s preliminary findings, Finland's economy continues to face challenges due to slow productivity growth and weak private demand. While some recovery is expected next year, several risks remain. The report notes that after a contraction in 2023, real GDP grew by only 0.4 percent in 2024 before slowing again in 2025. Private consumption has been affected by uncertainty, falling house prices, and increased interest rates since 2022. Despite these difficulties, net exports have supported growth even as tariffs rose.
The IMF projects economic activity will stay subdued this year with annual growth at about a quarter percent but expects output to rise by one-and-a-half percent in both 2026 and 2027 as domestic demand recovers alongside rising real wages and investment projects.
Inflation has remained stable at around two percent due to lower energy prices balancing out higher core inflation. Real incomes have returned to pre-pandemic levels.
The fiscal deficit widened significantly to reach 4.5 percent of GDP in 2024 despite efforts at consolidation. Weak revenue growth combined with higher defense spending and pressures from health and social services are expected to keep the deficit largely unchanged in 2025. Public debt is projected to approach ninety percent of GDP next year—levels above those seen in other Nordic countries.
Risks identified include external factors such as escalating trade tensions and geoeconomic uncertainty; domestically, there are concerns over slow labor market recovery, declining house prices, continued weak productivity growth, larger spending needs, and higher long-term interest rates impacting public debt sustainability.
The IMF recommends further fiscal consolidation measures aimed at reducing public debt over time. They suggest an annual consolidation of half a percent of GDP (about €1.5 billion) until the fiscal balance improves enough for debt levels to decline. The new national fiscal framework—the Parliamentary Pact for Fiscal Policy—is viewed positively as it reflects cross-party commitment toward steady debt reduction over multiple parliamentary cycles.
Labor market reforms have helped increase labor supply through changes in regulations and immigration policy; however, more needs to be done regarding tertiary education attainment which remains below peer country averages. Upskilling workers will also help facilitate adoption of artificial intelligence technologies.
Barriers faced by start-up firms limit their ability to grow internationally and reduce overall productivity gains for Finland’s economy; thus reviewing domestic regulations and improving access to funding are considered important steps forward.
Within the European Union context, reducing barriers to intra-EU trade could yield significant benefits given Finland’s current economic environment characterized by high debt levels and weak productivity growth.
On financial stability issues: “While the banking system remains resilientand systemic risks are contained, vulnerabilities persist,” according to the statement attributed directly from IMF staff findings. Banks show strong capital positions but vulnerabilities exist stemming from weaker real estate markets along with high household debt levels across borders within Nordic-Baltic regions—a joint stress test planned for 2026 aims at addressing these concerns further.
Macroprudential policies should continue strengthening bank sector resilience through maintaining buffers like systemic risk buffer on credit institutions at one percent while phasing-in positive neutral rates for counter-cyclical capital buffers; borrower-based measures such as loan-to-value limits should remain unchanged while adding new tools related to income ratios into policy frameworks would also help maintain financial stability going forward.
The IMF team expressed gratitude toward Finnish authorities as well as private sector participants for their cooperation during consultations.