Etla: Effects of Iran war on Finland will remain moderate

The economic think tank predicts a modest recovery for the construction and service sectors. File photo of Kotka shipyard. Image: Antro Valo / YleYle NewsFinland's manufacturing industry will continue to grow this year, according to a report by the Research Institute of the Finnish Economy (Etla), and that growth will spread to the construction and service sectors. The think tank's forecast noted that the crisis in the Middle East raises uncertainties for many sectors of the Finnish economy, but it has assessed that its impact on industry will remain moderate."The Iran war has raised energy prices, which weakens EU and especially German economic growth. Through this, the war could also weaken demand for Finnish exports. However, we expect that the war's effects will remain small," Etla senior researcher Sakari Lähdemäki said in a press release. Etla forecast in March that the Finnish economy will grow by one percent this year and by 1.5 percent next year, and said it is confident that this level of recovery is achievable. However, the institute added that the outlook is much stronger for some sectors — such as the shipyard and metal industries — than for others, including the chemical and forestry sectors. Following years of decline and job losses, Etla predicts that the construction sector will return to growth again this year — although the recovery is expected to be slow. In this sector, the shadow cast by the war in Iran is having an effect, as the uncertainty it causes is impacting Finland's stagnant housing market. In addition, the rise in fuel prices due to the Iran war directly affects demand and profitability in the transportation and storage sector. Etla expects these sectors to see a decline this year, before bouncing back next year.