(Adds finance minister comments, background)
HELSINKI Dec 22 Finland's economy has moved out
of recession but the government may still need to cut public
spending by a further 1 to 2 billion euros if growth doesn't
pick up by next spring, Finance Minister Petteri Orpo said on
A finance ministry forecast showed that economic growth in
the Nordic country would accelerate this year, but slow down
again in the next two years due to weak export outlook and
structural problems in the labour market.
Finland's centre-right government is on track to make 4
billion euros ($4.19 billion) of spending cuts by 2019 and, with
reforms, it aims to save 10 billion by 2030. Orpo did not say
when the additional 1 to 2 billion euros in cuts might come.
"The recession is over, but this growth rate is not enough
to reach the government programme target of curbing our debt and
zero deficit by 2021", Orpo told Reuters.
The euro zone's northernmost member is slowly returning to
growth after a decade of stagnation sparked among other things
by a decline of Nokia's former phone business and a
recession in neighbouring Russia.
The finance ministry raised its forecast for this year
expecting gross domestic product to grow by 1.6 percent, up from
1.1 percent, driven by growing private consumption.
For the next two years, the ministry kept its forecast
largely unchanged, expecting growth of 0.9 percent in 2017 and
1.1 percent in 2018.
Despite the slow recovery, the government has so far
deferred plans for more spending cuts while it waits for its key
labour reform to kick in.
The finance ministry said the reform, which cuts workers'
benefits and increases working hours, will improve Finland's
competitiveness in terms of unit labour costs in the long run,
but will weaken both private and public consumption next year.
Thursday's forecast does not include effects of the health
care reform the government agreed on Wednesday, which aims to
curb future health care costs by around 3 billion euros as
Finland struggles with an ageing population.
($1 = 0.9540 euros)
(Reporting by Tuomas Forsell and Jussi Rosendahl; Editing by