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Fast Comment FinlandFinnish GDP growth remained reasonable in Q2

  1. GDP grew by 0.5 percent q-o-q and 1.2 percent y-o-y in Q2 2019
  2. Domestic demand made a minor rebound
  3. Gradually weakening GDP growth expected
GDP grew by 0.5 percent q-o-q and 1.2 percent y-o-y in Q2 2019
The preliminary GDP data showed that growth in the Finnish economy remained moderate in Q2 2019. However, the economy has clearly slowed since last year. According to Statistics Finland, Finnish GDP grew by 0.5 percent q-o-q/1.2 percent y-o-y in Q2. GDP growth was weaker than the 0.9 percent q-o-q growth suggested by the recently published GDP indicator. However, the q-o-q GDP growth in Q1 2019 was revised upward to 0.5 percent (previously: 0.2 percent). During H1 2019, GDP grew by 1.0 percent y-o-y.
Domestic demand made a minor rebound
Finnish GDP growth in Q2 was supported by domestic demand, which made a minor rebound after somewhat dismal Q1 figures. After a contraction in Q1, the volume of private consumption increased by 0.9 percent from the previous quarter and by 0.2 percent from 12 months back. Instead, government consumption expenditures decreased by 0.3 percent q-o-q, but increased by 2.4 percent y-o-y. Gross fixed capital formation grew by 0.5 percent q-o-q and 1.2 percent in y-o-y terms. The volume of construction investments grew by 0.9 percent q-o-q/2.3 percent y-o-y and the volume of investments in machinery and equipment increased by 0.9 percent q-o-q/1.9 percent y-o-y. The volume of exports decreased by 0.5 percent q-o-q, while y-o-y growth expanded by 4.1 percent. After a marked contraction in Q1 (revised to -4.4 percent q-o-q), the volume of imports rose by 2.8 percent q-o-q and 2.7 percent y-o-y.
Gradually weakening GDP growth expected
The 2019 Q2 GDP figures were in line with the expectations of gradually weakening Finnish GDP growth. Although quarterly growth was somewhat weaker than expected, the upward revision to Q1 figures implies that H1 growth was still reasonable. Despite a modest rebound in Q2, private consumption remained more or less on the level of the previous year. However, construction investments continued to post positive growth figures, thereby supporting domestic demand. Finnish exports were surprisingly strong in the beginning of the year, but Q2 provided the more or less anticipated shift to more sluggish growth figures. Import growth was robust in Q2, but foreign trade made a positive contribution to GDP growth. We expect Finnish GDP growth to continue to slow to below 1 percent next year.


Janne Ronkanen

Senior Economist


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