The ongoing war in the Middle East is expected to slow Finland's economic recovery, according to a forecast by financial giant OP Pohjola.
The institution has downgraded its economic forecast for this year, but its prediction for 2027 remained unchanged.
On Monday, OP said it expects Finland's GDP to grow by 1.0 percent in 2026, and by 1.5 percent in 2027.
Data from January and February showed that Finland's economy had continued to recover, it noted, although the war in the Middle East — which broke out after the US and Israel attacked Iran at the end of February — was delaying the turnaround.
"The war in the Middle East and its consequences will inevitably weaken Finland's economic development. Finland's economy will get through the short-term spike in oil prices and rise in uncertainty, but it will take a hit. For example, payment card data does not, for the time being, indicate any significant change in consumer behaviour," OP Pohjola's Chief Economist Reijo Heiskanen said in a press release on Monday.
Extended war risks recession
OP's forecast is based on an assumption that after increasing for a few months, oil prices would drop to around 70 US dollars a barrel by the summer.
On Monday morning, the price of Brent crude oil futures were around 102 US dollars a barrel, having jumped after US President Donald Trump announced plans to blockade the Strait of Hormuz, a key sea channel which under normal circumstances delivers about a fifth of the world's oil.
The blockade plans were announced following unfruitful peace talks between the US and Iran over the weekend.
OP Pohjola said that if the crisis in the Middle East continues for a prolonged period, it "could push the economy into recession especially as uncertainty would increase at the same time".
"Finland's economy has been slow to adapt to economic shocks for at least half a century. Recurring shocks increase the probability that subdued economic growth of the Finnish economy becomes prolonged. Periods of weak growth have not been overcome without substantial economic policy measures, whether in the 1970s, the 1990s or the 2010s," Heiskanen said in the release.
