OP economists' economic forecast: Mixed developments in the economy
(Thomson Reuters ONE) -
The cheaper oil has improved the global economic outlook, but many risks still
remain. In this year and the next, global economic growth will mildly outpace
the average for the past decades, at 3.8%. In 2012-14, the rate of global
economic growth only reached 3.3%.
- The oil price drop nevertheless will not invigorate the global economy by as
much as earlier. Oil has become less significant, and interest rates cannot be
lowered in many countries even though inflation is waning. Accordingly, we have
raised our growth projections notably less than our models would suggest, notes
Reijo Heiskanen, Chief Economist at OP.
The euro zone economy in particular is still so fragile that any revival may
easily lose its steam. The numerous risks also prompt caution. The acknowledged
risks relate to Greece, the geopolitical situation, the growing financial
markets volatility and other such factors.
The oil price fall slows inflation on a global scale. In the euro zone, prices
will decline for the greater part of this year. The ECB is set to expand
quantitative easing early in the year. The most immediate consequence of the ECB
policy is the continued depreciation of the euro.
- The ECB may no longer say that the inflation expectations are in line with its
target. For long-term inflation, the expectations are not only below the ECB
target but also at a record low. Average inflation too may be in negative
territory this year. The ECB has no other choice but to respond immediately to
the changed outlook, Reijo Heiskanen estimates.
The Finnish economy is finally seeing some growth
The Finnish economy rebounded moderately during 2014 and the slow revival will
continue this year. OP economists forecast 1.0% GDP growth for Finland for this
year and 1.7% growth for 2016. Our earlier forecast for 2015 was 0.6%.
- It has been a while since we last revised up our growth projections. There
have been several disappointments along the way. Risks still exist, but now they
are to the upside as well as to the downside. The latest data indicate that the
economy would have expanded by approximately one percentage point in October and
November. In our economic forecast, we have made moderate assumptions about the
contribution from the lower oil price, Heiskanen explains.
Finnish exporters will benefit from the more buoyant export market and the
weaker currency, but will be hurt by Russia's slide into a clear recession and
by the sanctions. Total exports will nevertheless continue to recover at a
moderate pace.
Inflation will decelerate this year to 0.2%, and the risks in the inflation
forecast are still to the downside. The inexistent inflation will support
purchasing power in Finland, but as confidence will remain weak and the saving
ratio will rise, consumption will only grow marginally. Investments pick up with
a lag and will contract in 2015 still.
The cheaper oil also improves Finland's external balance, and the country's
current account will balance out. Unemployment will head further up in 2015
before turning down slightly in 2016.
Despite the savings in public expenditures, the fiscal deficit will only shrink
marginally this year, in part because the surplus of social security funds will
decrease. Our 2016 forecast assumes a relatively neutral fiscal policy because
the new government will have to balance between lowering expenditures and
fostering growth, and it will have to find a way to consolidate different
viewpoints.
- We could hope for much more courageous economic policy moves, but right now we
are not seeing any indications that would justify basing our economic forecast
on any other hypothesis but our reasonably neutral policy assumption, Reijo
Heiskanen states.
For more information, please contact:
Reijo Heiskanen, Chief Economist, tel. +358 50 568 6623
Timo Hirvonen, Economist, tel. +358 40 549 2476
Maarit Lindström, Consumer Economist, tel. +358 40 531 8262
OP Financial Group is Finland's leading financial services group providing a
unique range of banking, wealth management and insurance services. OP's mission
is to promote the sustainable prosperity, security and wellbeing of its
customer-owners, customers and operating regions. Its objective is to offer the
best and most versatile package of loyal customer benefits on the market. OP
Financial Group consists of about 180 member cooperative banks, its central
institution OP Cooperative, and the latter's subsidiaries and affiliates. The
Group has a staff of 12,000. OP Financial Group has 4.3 million customers.
As laid down in the applicable law, OP Cooperative and its member credit
institutions are ultimately jointly and severally liable for each other's debts
and commitments. The joint liability in the OP Financial Group is prescribed by
the Act on the Amalgamation of Deposit Banks. Pohjola Bank plc and OP Mortgage
Bank are responsible for OP's funding operations on money and capital markets.
www.op.fi
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Source: Pohjola Pankki Oyj via GlobeNewswire
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Datum: 22.01.2015 - 09:00 Uhr
Sprache: Deutsch
News-ID 366173
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