HELSINKI Finland's central bank lifted its economic growth forecasts on Tuesday, citing recovering exports, but said that reforms were needed to boost growth and strengthen public finances.
The bank said it now expects the gross domestic product to rise 2.1 percent this year, up from a previous forecast of 1.6 percent in March. Last year, GDP grew 1.4 percent.
The bank also forecast growth of 1.7 percent for 2018 and 1.4 percent for 2019, compared with previous estimates of 1.5 percent and 1.3 percent, respectively.
"Despite the firming up of exports, economic growth in the forecast period will mainly depend on private consumption and investment. Private consumption growth will be bolstered by an improvement in the employment situation and rising purchasing power," the bank said in a statement.
The Finnish economy is recovering from decade-long stagnation following a string of problems, including the decline of Nokia's (NOKIA.HE) former phone business, rigid labor markets and recession in neighboring Russia.
The center-right government has cut spending and loosened labor laws, but the central bank said that more measures were needed to improve conditions for future growth.
"The Finnish economy is now embarking on a growth path in a vulnerable condition... The outlook is in any case overshadowed by a growing need for care services for the ageing population in the 2020s," Governor Erkki Liikanen noted.
(Reporting by Jussi Rosendahl Editing by Jeremy Gaunt)