Finland: Weak outlook for 2013
10 JANUARY 2013
After growing in the first quarter 2012,
recession hit Finland
with GDP falling in thesecond and third quarter by 1.1 and 0.1% q/q respectively (Chart 1). Data for differentparts of the economy points at a weak fourth quarter. For the full year 2012, GDP isexpected to have fallen slightly compared to 2011.
The drop in GDP in the third quarter was broad based and indicators have continued toweaken (Chart 2). We revise our forecast slightly downward compared to
GDP is expected to grow by 0.4% 2013 and 1.8% 2014.
With world growth below trend in the near term
exports will continue to be a drag onthe economy
. The confidence in industry is negative and on a falling trend, although stillfar from the levels that we saw during 2009.
industrial production and exports to be weak in the near future
. Thedownturn in exports is to some extent dampened by a relatively better development inRussia (3
largest export market). Exports are expected to have been roughly unchangedin 2012 compared to 2011 and will start growing again at a slow pace in 2013 (Chart 3).Foreign trade will have a negative contribution to growth 2013 and 2014 as importsincrease faster than exports.
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2011 2012 2013 2014
GDP 2.7 -0.1 0.4 1.8Unemployment
7.8 7.8 8.3 8.1Inflation 3.3 3.2 2.3 2.1Government fiscal balance** -0.6 -1.0 -1.0 -0.8
* Per cent of labour force, ** Per cent of GDPSource: SEB