1. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Economic outlook 2011–2013 Euro & talous (Bank of Finland Bulletin) 5/2011 Governor Erkki Liikanen 15.12.2011

2. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Marked slowdown in Finnish economic growth 15.12.2011

3. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Economic recovery stalls 15.12.2011

4. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Supply and demand 15.12.2011 * At current prices, EUR billion 2010 * 200920102011f2012f2013f % change in volume on the previous year GDP180,3-8,23,62,80,41,8 June 2011 forecast3,82,62,4 Change-1,0-2,2-0,6 Imports70,3-16,17,4-0,70,05,6 Exports72,6-21,58,6-3,20,46,0 Private consumption98,5-3,12,73,71,21,4 Public consumption44,30,90,60,10,40,7 Private investment29,3-15,93,96,61,84,8 Public investment4,64,7-3,82,9-0,4-1,7

5. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Drop in unemployment comes to a halt 15.12.2011

6. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND No improvement in employment in immediate years ahead 15.12.2011

7. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Youth unemployment high 15.12.2011

8. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Labour productivity growth slows 15.12.2011

9. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Slowing productivity development pushes up unit labour costs 15.12.2011

10. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Demand outlook weakens 15.12.2011

11. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Household consumption growth becoming subdued 15.12.2011

12. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Finnish export growth sluggish 15.12.2011

13. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Current account surplus melting 15.12.2011

14. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Inflation slowing gradually 15.12.2011

15. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Energy and food prices have driven inflation 15.12.2011

16. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Forecast: Inflation will gradually slow 15.12.2011

17. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Public finances facing challenges 15.12.2011

18. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Central government deficit sizeable 15.12.2011

19. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Public debt will continue to grow without new measures 15.12.2011

20. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND General government adjustment need in terms of the tax ratio 15.12.2011

21. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Finland’s public finances:  Expenditures and tax rates have been set according to faster economic growth than currently envisaged.  The public finances will already hit the debt ceiling in the next few years.  Public finance sustainability problems are increasing the pressure for structural reforms.  The threat of a rapid deterioration in the Finnish economy and budgetary position is real. 15.12.2011

22. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Alternative scenario: debt crisis leads to global recession 15.12.2011

23. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Alternative scenario: debt crisis leads to global recession 15.12.2011

24. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Finnish economy would enter a deep recession 201120122013 Real GDP, % change 2,5-2,00,7 Change relative to the forecast -0,3-2,4-1,1 Unemployment rate, % 7,99,010,1 Change relative to the forecast 0,11,12,2 Private consumption deflator, % change 2,60,3-0,3 Change relative to the forecast -0,2-2,2-1,9 General government net lending, % of GDP -1,5-2,8-4,5 Change relative to the forecast -0,2-1,6-3,3 15.12.2011

25. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Financial stability 15.12.2011

26. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Sovereign debt crisis significantly impairs the functioning of the European financial system 15.12.2011

27. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND An increasing number of euro area banks tighten their lending 15.12.2011

28. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Strengthening of the European banking system necessary for safeguarding banks’ lending capacity  European banking system needs more capital –October 2011 summit decisions on bank recapitalisation  High borrowing relative to total assets (high ”leverage”) makes banks vulnerable to wholesale bank runs 15.12.2011

29. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Finnish banks’ profitability and capital adequacy have remained stable 15.12.2011

30. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Finnish banks dependent on money and capital markets 15.12.2011

31. SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Stable bank loan growth Euro-denominated MFI loans to euro area non-financial corporations (incl. housing corporations), annual growth of stock 15.12.2011