Finland: 2026 Article IV Consultation-Press Release; and Staff Report

The 2026 Article IV Consultation with Finland discusses that since the 2023 downturn, the economic recovery has been slow as consumption has remained weak and construction investment fell. Weak growth and pressures from defense spending, health and social care overruns, and rising interest payments led to an overall fiscal deficit of 4 1/2 percent of gross domestic product (GDP) and public debt approaching 90 percent of GDP in 2025. Banks’ capital and profitability remain strong, and systemic risks are contained. Sectoral risks remain, however, and banks’ heavy reliance on short-term wholesale funding continue to pose tail risks. Labor market reforms have contributed to an increase in labor supply. This should be complemented by efforts to further integrate recent migrants and targeted tertiary education reforms. Artificial intelligence has the potential to significantly enhance productivity across several sectors and occupations, but its impact on the labor market should be monitored. Upskilling and reskilling the labor force and adapting active labor market policies to facilitate employment reallocation will be crucial. Finland has a strong basis to create innovative startups but faces challenges in scaling up.