Domestic Demand in Finland

Finland Domestic Demand | Economic News & Forecasts

Finland - Domestic Demand

Economic growth slows slightly in Q3

A second GDP release revealed the economy grew a revised 0.7% in the third quarter in seasonally- and calendar-adjusted terms from the previous quarter (previously reported: +0.5% quarter-on-quarter), which is down slightly from Q2’s 0.8% reading. In year-on-year calendar-adjusted terms, the economy expanded 2.2% in Q3 (previously reported: +1.9%), up from Q2’s 1.4% reading.

The small slowdown in quarter-on-quarter growth in Q3 was due to a 0.5% decrease in government consumption, which contrasted the 0.1% increase in Q2. On the other hand, private consumption growth accelerated to 1.5% in Q3 from 0.8% in Q2, likely on the back of a sustained increase in real wages and a continuation of easy credit conditions. Moreover, fixed investment growth accelerated to 1.1% in Q3 from 0.8% in Q2, primarily due to a notable acceleration in private investment and despite a drop in public investment.

Turning to the external sector, exports of goods and services increased 0.5% in Q3, contrasting the 1.1% drop in Q2, while imports rose 1.2%, which marks a small slowdown from Q2’s 1.4% increase. Overall, the external sector detracted 0.3 percentage points from economic growth in Q3, less than the 1.1 percentage-point detraction in Q2.

In 2020, the economy is expected to grow at a slower pace than this year, largely on weaker export growth as foreign demand appetite wanes and trade protectionism rises. With that being said, private consumption should grow at a solid pace thanks to low unemployment and rising wages. Public spending should also increase healthily as the ruling coalition government plans to raise expenditure by approximately EUR 2 billion; moreover, the effects of this increase on the real economy should be amplified by the fact that spending on interest payments is forecast to drop significantly.

Our panelists see the economy expanding 1.1% in 2020, which is unchanged from last month’s forecast. In 2021, the panel projects that GDP will rise 1.2%.

Finland - Domestic Demand Data

2013  2014  2015  2016  2017  
Domestic Demand (annual variation in %)-1.1  -0.1  1.2  3.3  2.0  

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Bond Yield-0.083.70 %Nov 21
Exchange Rate9.15-0.38 %Nov 21
Stock Market4,0580.0 %Nov 21

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