Finland: Economy gathers pace in Q3, fundamentals remain weak
December 5, 2016
The Finnish economy expanded 0.4% in Q3 over the previous quarter in seasonally-adjusted terms, which contrasted Q2’s 0.1% contraction, according to preliminary data released by Statistics Finland on 5 December. In annual terms, GDP growth was unchanged in Q3 at Q2’s 1.6%.
Although the reading observed in the third quarter points to a more solid recovery in the Nordic economy, the domestic sector, while still the main contributor to growth, saw a broad-based deceleration in most of its components. Growth in household spending decelerated to 0.5% (Q2: +0.9% quarter-on-quarter) and government consumption eased to a 0.1% expansion (Q2: +0.4% qoq). On a downbeat note, fixed investment plummeted and contracted 0.3% in the third quarter, notably below the 2.1% increase seen in the second quarter and the worst result since June 2015.
On the external front, the external sector’s net contribution to overall economic growth inched up from minus 0.2 percentage points to a flat contribution. Albeit a slight improvement, it was mostly driven by a pronounced decrease in imports (Q3: -3.3% qoq; Q2: +4.3% qoq), which managed to mute the effect of a plunge in exports. Exports of goods and services dropped 3.4% in the third quarter, which was a severe deterioration from the second quarter’s 3.9% increase and the biggest contraction since June 2013.
Author: David Ampudia, Economist