Ukraine crisis darkens Finland's economic outlook: ministry

People bask in the sun at the stairs of the Helsinki Cathedral in Helsinki, Finland, March 16, 2022. (Photo by Matti Matikainen/Xinhua)

Before the conflict began in Ukraine, the Finnish economy was recovering well from the COVID-19 pandemic, said the ministry. However, Western countries' sanctions against Russia have further accelerated inflation, which has decreased household purchasing power.

HELSINKI, April 13 (Xinhua) -- The Ukraine crisis has put the brakes on growth in the Finnish economy, according to an economic survey published by the country's Ministry of Finance on Wednesday.

Growth is predicted at 1.5 percent this year, less than previously anticipated, the ministry said in a press release.

Photo taken on March 31, 2020 shows a street in Helsinki, Finland. (Zhu Haochen/Xinhua)

Before the conflict began in Ukraine, the Finnish economy was recovering well from the COVID-19 pandemic, said the ministry. However, Western countries' sanctions against Russia have further accelerated inflation, which has decreased household purchasing power.

"The sanctions will practically stop Finland's foreign trade with Russia, which will cut Finland's economic growth this year," the ministry said.

The ministry forecast in September 2021 that Finland's economic growth would be 2.9 percent in 2022 and 1.4 percent in 2023.

A total cessation of energy imports from Russia could reduce the Finnish growth rate down to 0.5 percent for two years, Mikko Spolander, director general at the Ministry of Finance, said on Wednesday.

People visit a cocktail festival in Helsinki, Finland, March 6, 2020. (Matti Matikainen/Xinhua)

In the long term, the impact of the conflict in Ukraine will merge into structural changes in society and the economy, he added.

The impacts of the Ukraine crisis will also extend to Finland's general government finances due to the deteriorating economic situation, reinforcing the need for preparedness and creating spending pressure, the ministry said.

According to the ministry, the Ukraine crisis has rapidly darkened the economic outlook in the euro zone and will have far-reaching repercussions for the global economy, as it erodes confidence, raises energy prices, and accelerates inflation.