The Bank of Finland has adjusted its economic forecast for 2021-2024, saying it expects growth will slow down in the coming years. The central bank said that this year Finland's GDP will be 3.5 percent before dropping to 2.6 next year, and then 1.5 and 1.3 percent in the following two years.

In September, the central bank projected Finland's GDP to reach 2.8 percent next year.

While the bank said that the Finnish economy has made a quick recovery from the Covid crisis-caused recession, it noted there are problems.

"Consumption by households and a surge in investment by businesses will be the key drivers of growth. But the recovery is still uneven. The new virus variant in particular has quickly brought uncertainty to the economic outlook," Meri Obstbaum, the central bank's forecasting chief, said in a statement issued on Friday.

Inflation has risen sharply, with the rising prices of goods prompted by strong demand, according to the bank, which added that energy prices have also ticked upwards.

"The high crude oil price has fed through to consumers at the petrol pumps, and the rise in wholesale electricity prices has, to a certain extent, been passed on to consumer prices. Inflation will nevertheless slow during 2022, as energy prices are expected to start falling and supply bottlenecks to ease," Obstbaum said.

The epidemic has caused the Finnish state to rack up a large amount of debt, with public finances still in deficit at the end of the forecast period in 2024, according to the bank.

Interest rates

The central bank also commented on an announcement made on Thursday that the key interest rate will remain unchanged.

The US Federal Reserve has signalled that a key interest rate hike will arrive by next summer, but the European Central Bank (ECB) has not followed suit.

Meanwhile, according to Reuters, Britain became the first G7 country to raise interest rates since the Covid crisis began.

The news outlet noted that the different decisions made by central banks indicated "deep uncertainties" about how the new coronavirus variant Omicron will affect the world's economies.

The Bank of Finland's Governor, Olli Rehn, said the situation is completely different in the US and EU.

"Wage development is many times faster in the US than in the EU," Rehn said, adding that while the ECB has started a gradual normalisation of monetary policy, uncertainty remains high.

The central bank's outlook was not entirely negative; it did leave room for hope, saying that the economy could perform better than is anticipated.

The banks said that as the pandemic subsides, households would be able to start spending the savings made during the crisis period on goods and services. It added that eventual corporate investments could also be larger than expected.