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Finland: Pace of GDP contraction accelerates in Q1

June 5, 2014

According to official data released by Statistics Finland on 5 June, the Finnish economy contracted a seasonally-adjusted 0.4% over the previous quarter in Q1, which represented a deterioration over the 0.2% drop tallied in Q4 2013 and was the largest pace of contraction since Q4 2012. In annual terms, GDP fell 0.1% (Q4: -0.3% year-on-year), marking the lowest pace of contraction since Q1 2012.

The quarterly contraction was driven mainly by a deterioration in the external sector. Private consumption rose 1.1% over the previous quarter, which contrasted the 0.5% contraction tallied in Q4 and marked the largest expansion since Q3 2012. Conversely, government consumption swung from Q4’s 0.5% expansion to a 0.7% contraction in Q1. Fixed investment improved from Q4’s 1.7% drop to a 0.3% contraction in Q1.

On the external front, exports contracted a seasonally-adjusted 1.9% in the first quarter, which was below the 0.9% contraction seen in Q4 and was the largest pace of contraction since Q2 2011. Imports contracted 2.9% in Q1, which was below the 2.0% drop seen in the fourth quarter. As a result, the external sector’s net contribution to GDP growth inched down from plus 0.4 percentage points in Q4 to plus 0.3 percentage points in Q1.

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 0.2% this year, which is down 0.2 percentage points from last month’s projection. For 2015, the panel sees GDP expanding 1.4%.


Author: Teresa Kersting, Economist

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Finland GDP Chart


Finland GDP Q1 2014

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


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