Finland: Economic activity swings back to growth in March
May 18, 2021
Economic activity swung back to expansion in March, with output growing 1.1% year-on-year in working-day adjusted terms (February: -0.7% yoy). While the reading marked the best result since February 2020, it was also largely due to a favorable base effect.
March’s improvement was chiefly due to the services sector swinging back to growth in March. Meanwhile, output in the primary sector—which includes the agriculture, hunting, forestry and fishing subsectors—expanded at a more moderate pace. Lastly, secondary production contracted in the same month.
Consequently, the trend pointed up, with annual average variation of economic activity coming in at minus 2.7% in March, up from February’s minus 3.1%.
On a seasonally-adjusted monthly basis, economic activity dropped 0.6% in March, contrasting February’s 0.4% expansion.
Moreover, preliminary data shows the Finnish economy continued to gradually improve in the first quarter of 2021. GDP grew 0.4% in seasonally-adjusted quarter-on-quarter terms, matching Q4’s growth rate. In year-on-year terms, GDP dropped 0.3% in Q1, easing further from Q4’s 0.8% fall.
Detailed national accounts information will be released 28 May.
Commenting on Q1’s preliminary results and the economic outlook for the remained of the year, James Watson, senior economist at Oxford Economics, noted:
“Finland is keeping tight control over the coronavirus outbreak. New infections are falling steadily, over 40% of the adult population has received at least one vaccine dose and the government is beginning to ease restrictions. We expect a firm pick-up in economic activity this summer and for GPD to have fully recovered its pre-Covid level by autumn. Combined with a surprise expansion in Q1 GDP, this positive outlook has prompted us to raise our 2021 growth forecast to 2.5% from 1.9% in April.”
Author: Marta Casanovas , Junior Economist