Finland: Private consumption and exports buttress first quarter GDP growth
June 5, 2012
In the first quarter, GDP expanded a seasonally adjusted 0.8% over the previous quarter, which came in above the flat reading recorded in the preceding quarter but below a preliminary estimate of a 1.3% increase. Compared to the same period last year, the economy grew 1.7% in working-day adjusted terms, up from the 1.2% increase tallied in the previous quarter.
The acceleration was underpinned by robust growth in private consumption, which soared 2.7% over the previous quarter (Q4 2011: +0.4% quarter-on-quarter), its fastest pace in over 12 years. Fixed investment also improved, accelerating from zero growth in the fourth quarter to a 0.3% increase in the first. Meanwhile, government spending added 0.5%, which mirrored the previous quarter's increase.
The external sector also contributed positively to the acceleration seen in the first quarter. Exports swung from a 0.3% contraction in the fourth quarter to a solid 3.7% expansion. Imports, on the other hand, contracted 1.3% in the first quarter, which contrasted the 3.7% expansion recorded in fourth quarter.
The Bank of Finland recently revised its growth projections for this year to a 1.5% expansion, up from the previously forecasted 0.4% increase. However, the Bank cut its growth projections for next year to 1.2%, down from the previously projected 1.8%.