The recovery is losing momentum. Exports will continue to deteriorate as the global economy slows and Finland’s export performance remains weak. Domestic demand has held up well so far, but consumer confidence is eroding rapidly and real incomes are falling, foreshadowing a marked slowdown in private consumption and residential investment. Weak demand will weigh on business investment and overall output growth will slow during 2012. A recovery during 2013 is projected as the global outlook brightens, uncertainty falls and income growth resumes. The slowdown will lead to lower employment and higher unemployment. Fiscal policy, while ensuring medium-term consolidation, should allow automatic stabilisers to work.