Finland GDP Q2 2016


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.

The government expects the economy to expand 0.9% in 2016 and 1.2% in 2017. FocusEconomics Consensus Forecast panelists are broadly in line with the Central Bank’s forecast and expect the economy to expand 0.9% in 2016, which is unchanged from last month’s projection. For 2017, the panel sees GDP expanding 1.0%.

Author: Teresa Kersting, Economist

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Finland GDP Chart

Finland GDP Q2 2016

Note: Quarter-on-quarter changes of seasonally-adjusted GDP in %.
Source: Statistics Finland and FocusEconomics Consensus Forecast.

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