EP401 · Economy · first published 2026-08-17 · updated 2026-08-22
Finnish Economy +2.1% – Is This the Turnaround? | Lasse Corin | Negotiator 401
Aktia chief economist Lasse Corin unpacks a forecast of 2.1 percent GDP growth for Finland. The episode separates what in that number is real growth from what is a statistical artefact, why the fighter jet procurement barely moves GDP, what rising productivity actually measures, and why Finland's public finance figures are unusually hard to read in international comparison.
Finnish Economy +2.1% – Is This the Turnaround? | Lasse Corin
Summary: Aktia chief economist Lasse Corin returns to Neuvottelija for a second appearance, this time on cheerier terms than the first. The new forecast puts Finnish growth at 2.1 percent this year, 1.8 percent next, and 1.5 percent in 2028. The conversation does not stop at the headline number — it takes it apart: what in the growth is genuine, what is an artefact of how things are measured, and what follows from structural decisions already made.
Note. Corin appears as Aktia’s chief economist and his views are attributed to him throughout. Miettinen’s positions are his own. The episode is not a commercial collaboration, which the host states explicitly — though he mentions having moved his mortgage to Aktia.
What the 2.1 percent is made of
Corin lists the drivers in the order he thinks they withstand scrutiny.
Exports are growing, and not on the back of a single order. This is the distinction that matters to him. An export figure can jump on one large delivery and fall straight back the next quarter. Here the growth is spread across several destination countries, which makes it a qualitatively different thing.
Consumption and investment are picking up. The movement is small in both but points the right way — and in investment it holds even with the fighter jet procurement excluded.
Indicators outside the national accounts confirm the picture. Corporate turnover volume, meaning turnover with price changes stripped out, is growing even in retail, a sector unusually sensitive to the cycle. Corin’s own favourite indicator is car dealer confidence, which has strengthened clearly.
OP published its own forecast the same day at 2.0 percent. Corin’s read is that the figure starts with a two and could even come in above.
Will the figures be revised, and in which direction
Here the episode takes a critical turn. The first GDP estimate comes from the trend indicator of output, and Statistics Finland refines it as data accumulates. Corin considers revision likely.
Miettinen puts forward an observation he made with his AI agent, and he states plainly that it is a null-hypothesis test rather than an accusation: he is not claiming political steering at Statistics Finland, but in his comparison the revisions have moved consistently in different directions across different governments. The Orpo government’s years were initially given negative growth outcomes that were later corrected upward; under Marin and Rinne, preliminary figures were revised sharply down.
The mechanism he suspects is technical rather than political: public consumption expenditure is sticky and enters the statistics quickly, while private sector data lands later. Corin does not take a position on whether the phenomenon exists, but notes that data quality is improving all the time. The topic is deferred to the episode’s members-only segment.
The fighter jets do not explain the growth
This is the episode’s sharpest single correction to public commentary.
The fighter jet procurement shows up in GDP in two places. It is recorded as a machinery and equipment investment under the public sector, which raises GDP. It is simultaneously recorded as an import, because the aircraft are not manufactured in Finland, and rising imports lower GDP. The two entries essentially net each other out.
Corin says he asked Statistics Finland for an exact figure without getting one, but considers the effect so small that the growth cannot under any circumstances be attributed to buying fighter jets. He adds his own assessment: from a growth perspective the procurement is not a smart way to spend billions. Hiring maintenance staff generates some activity, but Finland already has fighter jets and the crews that service them — they will be retrained rather than added to.
Where defence spending would move GDP: replacing imported weapons technology with domestic or EU production, because that is investment without a matching import, and arms exports, if other countries’ investment turns into Finnish orders. Patria’s orders for armoured personnel carriers are good, Corin says, but the defence industry in Finland still sits in the shadow of paper, chemicals and engineering. Sweden is the comparison: its fighter aircraft and submarines are products of an entirely different order in value-added terms.
The wider backdrop is a thousand-billion German investment programme and NATO’s shift to a 3.5 percent investment target plus a further one and half percent of general defence spending — roughly 5 percent total, with Spain the exception. Dual-use technology firms are booming on the private side as well.
Productivity is rising — but what does it measure
Corin computes productivity simply: quarterly GDP divided by the hours actually worked in that quarter. The figure has risen substantially, and the rise has two components: hours worked have fallen while GDP has grown.
The tempting reading is that Finns are doing their work faster. Corin’s own assessment is different, and it is compositional: the structure of the economy has shifted. Services, where productivity is typically lower, are doing worse. Industry, where productivity is naturally higher, is doing clearly better on orders, output expectations and outlook. When the high-productivity sector’s weight rises, whole-economy productivity appears to rise without anything having changed inside either sector.
The analogy comes from the pandemic. US productivity went almost straight up while the world appeared to be falling apart — because restrictions closed low-productivity sectors specifically, restaurants and cinemas. Productivity per hour worked was genuinely higher, but the cause was in the mix, not in performance.
Is AI visible in productivity
Miettinen says he wants to believe the rise is AI, but the realist in him doubts it. Corin agrees and is precise about why: the productivity effect shows up in firm-level studies but not yet at the level of the national economy. The change has been so fast that he finds it hard to see implementation having worked through.
The conversation turns to what makes AI awkward for statistics. Corin’s mechanism is indirect: if a firm uses AI and its turnover and profit grow on the same workload, the productivity eventually appears in the income statement and from there in the statistics. Miettinen’s point is that a great deal of productive work happens in households and in individual work that is not measured at all — the same blind spot as the shift to remote work during the pandemic.
Miettinen extends this into a broader proposal: the model of the economy is a trinity of households, firms and the public sector, and it is missing AI as a factor of production. It is not capital, not human labour, and certainly not the public sector. Corin’s response is a deflating analogy: PowerPoint. When it arrived, transparencies no longer had to be made, hours worked fell, and the same hours produced more. AI is more efficient by many multiples, but the phenomenon is recognisably the same adoption of a new technology.
Miettinen adds one more idea from a working paper he ran: AI’s productivity effect ought to show up as deflation, not inflation. His reading of rising rates is that they reflect rising default risk at both sovereign and corporate level rather than inflation expectations. He has not yet found the signal in the series he has run.
Unemployment, incentives, and what has already been done
The tension is obvious: GDP is growing and productivity is rising, but unemployment is high — Finland is near the top of the EU comparison. In 2025 employment services were transferred to 45 employment areas, meaning the state no longer conducts employment policy in Finland. Corin thinks eighteen months is too little to judge, but considers it important that reforms are being made and that labour market dynamics improve.
Miettinen’s criticism of Aktia’s report is that it contained almost no policy — even though in his view the tax decisions already taken have an enormous effect and are already acting as drivers in the economy. The top marginal rate has been cut this year, and corporate tax falls from 20 to 18 percent next year.
Corin’s answer is about time horizons: he believes the reforms help but considers them long-acting, and in the short run they are entangled with everything else. Consumer confidence was weak before them and exports had already turned up before them. To get the full benefit of the tax decisions, firms would have to want to hire — which requires a need to grow and preferably firms in new sectors.
Both regard calls to reverse the tax cuts as a mistake. Corin notes that measured against the kind of reforms Finland has previously attempted, these are significant changes and it is good that something new is being tried. Miettinen’s assessment is that reversal would mean slower growth without necessarily raising state tax revenue. On the labour market, restricting the right to strike has brought some industrial peace and the export sector has been in a good bargaining position.
Housing: prices are at the bottom, confidence is missing
Corin is direct about house prices. They have fallen genuinely far, and once nominal income growth is taken into account, the ratio of house prices to incomes is at its lowest in the measured history of the OECD index — a series going back 50 years. Miettinen adds the Chamber of Commerce’s Juho Romakkaniemi framing: this may be the best moment in 30 years to buy. Corin thinks that is entirely possible.
On the interest rate objection he has an answer: yes, a mortgage now carries a higher rate than five or six years ago, but the compensation delivered in the house price is even larger than the rise in interest cost. The same flat costs less.
What the market lacks, in his view, is one thing only: a clear improvement in unemployment. The reluctance to buy comes from how the labour market is reported.
Duration dependence and banking sector resilience
Miettinen raises a Nordic peculiarity: extreme duration dependence on short rates. Nowhere else are loans tied as tightly to 1–12 month Euribor, on both the corporate and especially the household side. In the US and Britain fixed rates are the norm, and one does not negotiate a three-month reference rate with the bank.
Corin recalls one country in the European comparison where households had even more floating-rate exposure than Finland — but it is the exception.
Both consider the pass-through of higher rates to have gone well. Households absorbed it, and the banking sector, in Corin’s words, bewilderingly well: credit losses have been very low. From this he draws an uncomfortable conclusion — has too little risk been taken, particularly in corporate lending. Miettinen goes further and names the largest bank’s over-capitalisation and caution as a brake on activity. The upside is that a systemic crisis is nowhere close.
On the level of rates both land in the same place: this is roughly the normal rate environment to be lived with. Five years ago the line was that a zero-rate environment could not last — and rates duly rose.
Public finances cannot take the same rates
Households and firms absorbed it; sovereigns did not. Corin’s number is concrete: central government interest costs were under one billion euros a year before rates rose, and are heading for six billion. In a budget of a little over 90 billion that is a staggering effect and one enormous component of the deficit.
Miettinen adds AI to this: if a tax base resting on taxing labour meets strong AI substitution, tax revenue will not carry rising interest costs either.
Three numbers that make Finland’s statistics exceptionally hard
This is analytically the most interesting stretch of the episode, and it concerns why Finland’s public finances are so easy to misread.
1. The pension surplus inside the deficit figure. Miettinen calls this the Sixten Korkman exception: Finland obtained the right to count the earnings-related pension system’s surplus against the budget deficit as a percentage of GDP. As long as the debate was conducted in percentage terms, a chronic deficit in euros was effectively masked. This has now been removed.
2. Pension funds counted as part of the public sector. In Finland the earnings-related pension funds are counted inside the public sector — a practice Corin considers exceptional and whose history he believes reaches back to the 1960s and 70s. Neither was certain of the origin; Miettinen asks listeners directly for information. The consequence is that roughly 300 billion euros of pension wealth appears in the size of the public sector.
3. The expenditure ratio and the tax ratio get confused. The aggregate tax ratio is roughly 42 percent. Total expenditure relative to GDP is around 57 percent. The gap is largely pensions. Of an earned-income pool of roughly 160 billion, some 120 billion is actual wage work and around 40 billion is pension flow — which appears as private consumption in GDP but is in nature a return of funded savings rather than bureaucratic spending. It is classified as earned income.
Both also reject the over-radical reading this invites. Five years ago it was common to claim Finland has no debt, because setting 300 billion of pension assets against the debt puts the calculation in surplus. Corin and Miettinen both treat that as wrong. The money is nevertheless real, and there is a real future need for it — and many countries have no such buffer at all.
The pension bomb, joint debt and the ECB
The absence of that buffer leads into the episode’s European stretch. When the cost of ageing lands in countries that have not accumulated one, it is late to start.
Corin’s question is what pressures that creates among euro area members. Miettinen’s assessment is that for a euro member the road runs through the ECB: a conversation about whether the ECB could buy more of a member state’s bonds, and not by the capital key. He treats this as concrete rather than theoretical and points to France, where a possible future president has said outright that such a conversation cannot be avoided.
Miettinen describes his own background as a floating-currency hawk and presents the ECU-2 model he once drafted for Libera: digital central bank money would be distributed to all euro members by the capital key, so that one euro is one euro across the area while a member’s own central bank money could be detached in a crisis. The current direction is a monolithic digital euro, which in his view solidifies the impossibility of an exit.
On joint debt both agree that criticism has grown since the pandemic loans and that a wall may have been reached. Miettinen’s national criticism is pointed: the other net contributor states secured permanent membership fee rebates, while Finland’s negotiating team did not even want one and settled for a one-off payment. Temporary packages come and go; permanent burdens remain. In his view Finland lacks a strategic vision and the debate is inexplicably thin.
His conclusion from the segment is that QE demonstrated the system can lift sovereign debt in a crisis without breaking a sweat — and that this requires no political decision and no pandemic-fund theatre, only a new Draghi.
The debt brake, the austerity package and a biased tax ratio
The policy stretch concerns the debate both say is conspicuous by its absence: the coming fiscal adjustment.
Corin puts the cut the debt brake requires at roughly 3.5 percent of GDP. That is a very large adjustment, and it is known that consolidation is far easier during a crisis — as in Finland’s 1990s depression — than without one. Asked whether it will happen, he said he believes the cuts will be made, but is not sure they fit into two parliamentary terms.
His position on the transition period is pragmatic: what matters more is that the decisions are taken, even if the tail is stretched. A longer transition gives the economy more capacity to adapt and is politically easier to carry through. The Ministry of Finance has suggested the required adjustment could not be done without tax increases. The National Coalition Party has, as Corin recalls, promised its own list of how the adjustment should be made, and he would gladly hear more.
Miettinen returns to the previous election and the methodological problem in forecasting the aggregate tax ratio. GDP forecasts always carry some rising path, but aggregate tax revenue is not forecast the same way — so the tax estimate is biased even when the GDP estimate is not, and the series consistently produces a declining projected tax ratio. On that basis, he says, a debate was held in which a one percentage point fall, roughly 3 billion euros, was presented as a worrying development to be corrected by raising taxes. His hope is that the same debate is not repeated — or if it is, that the unreliability of the indicator is covered too. Corin recalls the accounting literature treating the indicator critically.
Miettinen’s own line is that taxes should not be raised; private wealth should be grown and kept at national level, as in Italy. On the EU’s excessive deficit procedures he notes no sanction has ever been imposed on anyone — and France’s public finances are in worse shape than Finland’s even setting the pension question aside. Corin’s most important point in the debt discussion is that Finland still has good standing with investors and therefore time to make the adjustments.
Where the savings actually are
Both land in the same place: the public sector should be looking at AI with the same seriousness as firms.
Miettinen’s figures are 159 billion euros of total public expenditure and 25 percent of the workforce. His dictator fantasy is to drop the share to 15 percent and still deliver the same free-at-point-of-use services. Corin agrees the public sector should be establishing what AI makes possible there. The structures, in Miettinen’s view, defend themselves.
Corin’s own favourite target is different: the number of municipalities. Why does Finland need 300, and why does a municipality of a thousand carry exactly the same statutory obligations as one of 6,000. Miettinen’s proposal is to move municipalities onto the 45 employment areas — hardly radical, since Denmark has made a change of the same order.
Corin recounts a broadcaster event with a representative from Raasepori. The municipal merger was locally difficult, but asked afterwards, nobody wants to go back. The benefit of larger units was clearly observed — even though Raasepori remains small on the Finnish map.
Inheritance, gifts and the four thousand euro baby portfolio
The closing stretch turns to household wealth, and contains one concrete correction of a common misunderstanding.
You cannot in practice refuse an inheritance without consequence. You may decline, but the inheritance then passes to your children, and a minor’s guardian will not decline a loss-making estate. Miettinen’s point is that the left’s picture of inheritance is a million in cash, when the reality may be a property with no market value, or negative value, that generates upkeep costs and cannot be refused. Structural change is pushing such properties, through the inheritance system, to places where there is no use for them.
Sweden avoided this by abolishing inheritance and gift tax: there a property can be gifted without tax consequence and the recipient inherits the donor’s tax base. Miettinen considers the lock-in argument weak.
Then the practical part, which both treat as the most useful single piece of advice in the episode:
- The tax-free threshold for inheritance has been raised to 30,000 euros. On the gift side the tax-free amount is 7,499 euros per donor over a three-year period — the threshold is not annual, so the same donor may give that amount to the same recipient across three years. Because it is per donor, both parents can gift separately, and grandparents can gift to grandchildren as well.
- On Miettinen’s calculation, an investment of roughly four thousand euros at birth that is never touched is enough to reach the average Finnish pension level — around 400,000 euros, matching the present value of the notional annuity at retirement. Corin adds an asterisk: the figure rests on a nominal return of about 7.5 percent, and the real return is a couple of percentage points lower. The growth is still substantial — and Miettinen notes it beats the Finnish pension system’s own 4 percent real return target.
- Securities can be sold tax-free when total sale proceeds are at most 1,000 euros a year. The threshold applies to the sale prices, not to the gain. If the year’s sales exceed it by even one euro, the capital gains are taxed normally.
- Miettinen considers holding more than 5,000 euros in a current account shameful.
Corin adds an educational point that is his best contribution to the segment: at some stage children should be brought into it and told what has been done, what has been invested in, and why. Saving from the first pay cheque then becomes a habit — and because spending rises with income, saving from the outset adjusts spending automatically to the right level.
Neither presents the segment as tax advice. Corin notes he is an economist rather than a tax specialist and advises verifying the details.
Is the optimism earned
Corin answers yes, and justifies it on quality rather than quantity. The growth has been earned, and preferably not in the way it was about ten years ago, when it came very largely from construction — debt he says is still being paid down a little, because perhaps slightly too much was built.
There is no zero-rate hocus pocus this time, but investment, some consumption and exports. Many things are moving the right way. The strengthening of productivity is more than welcome, and although he explained it at the outset by industry’s weight, he believes genuine productivity is in there too.
The practical exhortations at the close come from both. Those in retirement should not hoard money in a bank account but spend it and pass some to children and grandchildren. For the young the first job is hard — and although Miettinen preaches AI productivity, he wants firms to hire young people. Aktia ran a large summer hiring campaign this year in which, Corin says, every unit in the portfolio management team took on a summer worker, more than in previous summers he has been there.
The episode closes with a handoff to the members-only segment on the measurement of GDP and how reliable an estimator Statistics Finland’s preliminary figure is for the eventual outcome.