The outlook for the Finnish economy remains fragile and the long-awaited economic recovery is at risk due to the indirect impacts from the Middle East war and the energy crisis. Although households' disposable income has increased, continued weak consumer confidence dampens private consumption. Furthermore, the pressure on the Finnish state's fiscal position means the government has less capacity to support the growth measures in the economy in the next two years. The muted economic environment, combined with high unemployment and elevated level of bankruptcies, has weakened the banking sector's asset quality in the past two years, but projected credit losses at 15-20 basis points (bps) remain manageable and modest in the European context. We revised downward our economic risk score
