Finland: Recovery in economic activity loses steam in December
February 16, 2021
Economic activity decreased 1.8% year-on-year in working-day adjusted terms in December, worsening from November’s 0.8% drop.
December’s larger fall was mostly driven by sharper contractions in both the services sector and secondary production over the previous month. However, the overall drop was cushioned somewhat by solid growth in the primary sector—including the agriculture, hunting, forestry and fishing subsectors—in December, which contrasted November’s notable fall.
On a seasonally-adjusted monthly basis, economic activity decreased 0.8% in December, swinging from the 0.9% growth recorded in November. Meanwhile, the trend pointed downwards, with the annual average variation of economic activity coming in at minus 3.0% in December, down from November’s minus 2.8%.
Moreover, preliminary data shows the Finnish economy continued its gradual improvement in the last quarter of 2020, although the pace of recovery slowed notably: GDP grew 0.2% in seasonally-adjusted quarter-on-quarter terms (Q3: +3.2% s.a qoq). In year-on-year terms, GDP contracted 2.0% in Q4, easing further from Q3’s 3.0% fall. As such, GDP contracted 3.7% in total over 2020, sharply contrasting the 1.3% growth clocked in 2019.
Detailed national accounts information will be released on 26 February.
December’s reading and the preliminary estimate for the final quarter of 2020 are largely the result of renewed restrictions implemented to curb the second wave of covid-19.
Commenting on the expected recovery this year, Timo Hirvonen and Janne Ronkanen, economists at Handelsbanken noted:
“After a soft patch in early 2021, we expect Finland’s economic growth to accelerate during the second half of 2021, as mass vaccination programmes are well under way. […] We expect that private consumption will be the main driver of economic growth, supported by exports, and that the labour market situation will improve during our forecast period.”
Author: Marta Casanovas , Junior Economist