HELSINKI, Sept 15 - Finland's economic downturn will last longer than expected, driven by weaker export demand and a rapid slowdown in construction activity in the face of high interest rates, the Bank of Finland said on Friday.
Hundreds of construction companies have already gone bankrupt this year in Finland, and the coming months do not look much brighter. Real estate data shows that new apartment sales in August dropped more than 60% year on year. Construction accounts for about 15% of Finland's gross domestic product and employs nearly 7% of the country's workforce, making it important for the wider economy, said Bank of Finland's deputy governor, Marja Nykanen.
"Swedish banks are exposed to real estate and housing financing, and when we have banks that operate across Nordic borders, contagion effects are possible," Nykanen told Reuters, adding that market turmoil in Sweden was being watched closely by the Finnish central bank.
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