Investing.com - Financial Markets Worldwide

Finnish Economy at a Standstill

ByDanske Markets
Published 03/13/2012, 09:13 AM
Updated 05/14/2017, 06:45 AM
  • We have revised our outlook for Finland to reflect better-than-expected Q4 11 figures and improved confidence indicators: GDP is now forecast to shrink 0.2% in 2012. The fall emanates mainly from exports hit by the euro crisis and a soft patch in construction. Industrial production fell markedly in January and new orders are on a falling trend. For 2013, we forecast decent economic growth of 2% on the back of solid private consumption and improving global demand.
  • The domestic market has held up well despite the economic downturn. Private consumption rose 3.3% in 2011. We expect private consumption to increase by 1.5% in 2012 due to relatively stable employment and salary increases. Confidence indicators have recovered from bleak autumn figures. Preliminary statistics show that retail sales volume rose materially by 4.5% in January. Public consumption increased in line with our estimate by 0.8% last year. This year we expect a growth rate of 0.5% with the announced spending cuts by the government.  
  • We expect investments to decline by 1.5% in 2012 but to increase again in 2013. A decline in housing permits and low construction confidence indicates a subtraction in investments in the first part of the year. The construction sector and households continue to be supported by the low interest rates as the majority of mortgage rates are linked to short Euribor rates. Apartment prices rose in January.
  • Exports declined by 0.8% in 2011. Preliminary figures show that in January exports value stayed on the same level as in 2011. Finnish manufacturing has a high weight in cyclical industries like paper and investment goods, which suffer from the euro area recession. We expect exports to fall by around 2% in 2012. Finland has fallen into a current account deficit. Growing demand should improve the situation in 2013.
  • We expect employment to hold up fairly well, assuming that most companies will rely on temporary layoffs, reduced hours and other soft methods, as was the case in 2009. 
    • FINLAND

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