Finland: Finnish economy stagnates in Q2 as weak external sector offsets stronger domestic economy
September 6, 2016
The Finnish economy recorded flat growth in Q2 over the previous quarter in seasonally-adjusted terms, which represented a slowdown from Q1’s 0.3% expansion, according to preliminary data released by Statistics Finland on 6 September. In annual terms, GDP growth picked up from 0.8% in Q1 to 1.1% in Q2.
Q2’s quarterly stagnation reflects that a deterioration in the external sector was countered by broad-based improvements in the domestic economy. In fact, all components of domestic demand picked up. Growth in private consumption sped up to 0.9% (Q1: +0.4% quarter-on-quarter) and public spending rebounded to a 0.4% expansion (Q1: -0.7% quarter-on-quarter). Fixed investment recorded a remarkable 3.6% increase in Q2, marking the fastest pace of growth in nine years (Q1: -1.0% qoq).
On the external front, exports rebounded to a 3.1% expansion in Q2 (Q1: -2.1% qoq), which marked the largest increase since Q1 2013. Imports also recovered, increasing 4.0% in Q2 (Q1: -4.4% qoq). As imports grew at a faster pace than exports, the external sector’s net contribution to overall economic growth deteriorated from plus 1.0 percentage points in Q1 to minus 0.4 percentage points in Q2.