Finland's third-quarter GDP decreased by 0.2% y/y. The figure was better than the advance estimate of 0.8% y/y contraction but stayed in the same category, with Greece well behind other EU countries. Year-to-date GDP from the first three quarters shows a modest growth of 0.1% y/y, which is close to our full-year forecast of 0.0%. Export industries continued to suffer from recession in Russia and focus on investment goods, which have faced anaemic demand.
The biggest positive surprise was private consumption, which grew by 0.8% q/q and 1.4% y/y. The labour market atmosphere is very heated at the moment, after talks to reach a centralised wage agreement failed. We may see more strikes ahead. Finland is set to breach both the 60% debt-to-GDP and 3% deficit limits this year but the EU commission has already stated that it still sees Finland complying with the Stability and Growth Pact. The outlook for 2016 is still weak but in 2017 and beyond we could see stronger growth, assuming continued wage moderation and improving global economy.
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