Finland: Economy swings into contraction in Q4
March 3, 2014
According to official data released by Statistics Finland on 3 March, the Finnish economy contracted a seasonally-adjusted 0.3% over the previous quarter in Q4 2013, which marked a deterioration over the flat reading tallied in Q3. In annual terms, GDP contracted 0.6% (Q3: -0.8% year-on-year). The Statistical Office also released preliminary annual estimates in which it estimated that, in the full year 2013, the economy contracted 1.4%, which is a deterioration compared to the 0.8% fall tallied in 2012.
The quarterly contraction was mainly driven by a deterioration in domestic demand, whereas the external sector tallied a slight improvement. Private consumption registered the strongest deterioration after having contracted a seasonally-adjusted 0.7% over the previous quarter (Q3: +0.1 quarter-on-quarter). Government consumption rebounded to a 0.4% expansion in Q4, which contrasted the 1.3% decrease in Q3. Fixed investment performed similarly to the previous quarter, contracting 3.2% over the previous quarter (Q3: -3.3% qoq).
On the external front, exports contracted a seasonally-adjusted 0.6% in the fourth quarter, which contrasted the 1.4% expansion seen in Q3 and marked the softest pace of contraction since Q3 2012. Imports contracted 1.0% in Q4, which was well below the 5.5% expansion seen in the third quarter. As a result, the external sector's net contribution to GDP growth swung from minus 1.6 percentage points in Q3 to plus 0.1 percentage points in Q4.
The Central Bank expects the economy to expand 0.6% in 2014 before accelerating to a 1.7% expansion in 2015. FocusEconomics Consensus Forecast panelists expect GDP to expand 1.0% this year, which is unchanged from last month's projection. For 2014, the panel sees GDP expanding 1.8%.