Finland: Economy contracts in Q4
March 1, 2013
In the fourth quarter, GDP declined a seasonally adjusted 0.5% over the preceding three-month period, according to data released by the statistical institute on 1 March. The reading was in line with market expectations and contrasted the 0.1% rise seen in the third quarter (previously reported: -0.1% quarter-on-quarter). In annual terms, the economy declined a working-day adjusted 1.5%, which represents a further deterioration over the 0.8% decline seen in the previous quarter and marks the lowest annual growth rate seen in three years. In the full year 2012, GDP contracted 0.2%, contrasting the 2.8% expansion seen in 2011.
The external sector was the main driver behind the deterioration over the preceding quarter. While exports swung from a 2.4% expansion in the third quarter to a 4.4% decrease in the fourth quarter, imports recorded a 1.5% rise (Q3 2012: -2.5% qoq).
On the domestic front, total consumption rose 0.4% (Q3: +0.7% qoq), underpinned by an increase in private consumption, which accelerated from a 0.7% expansion in the third quarter to a 0.9% rise in the fourth. Government spending, on the other hand, contracted 1.0% (Q3: +0.7% qoq). In addition, fixed investment remained in the red by posting a 2.5% contraction (Q3: -2.2% qoq).
The Central Bank expects the overall economy to grow 0.3% this year before accelerating to a 1.5% expansion next year. Panellists see the economy rising 0.5% in 2013, which is down 0.2 percentage points from last month's estimate. For 2014, the panel projects growth to pick up to 1.7%.