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Fast Comment FinlandFinnish industrial output rose by 3.7 percent in 2018

  1. Industrial production grew 3.3 percent y-o-y in December
  2. Goods export growth slowed steadily down during 2018
  3. Finnish export suffering from the weakening global demand and supply chain problems
Industrial production grew 3.3 percent y-o-y in December
Output of total industries adjusted for working days increased by 3.3 percent y-o-y in December 2018. In m-o-m terms, the seasonally-adjusted industrial output increased by 1.3 percent. In 2018, the output of total industries went up by 3.7 percent. Despite a decent growth in last few years, industrial output is still over 9 percent below pre-financial crisis levels. In December, the production levels grew most in chemical industry, by 2.0 percent m-o-m, while production decreased most in food industry, by 1.5 percent m-o-m. According to Statistics Finland, the value of new manufacturing orders went up by 6.1 percent y-o-y in December. In 2018 as a whole, new manufacturing orders fell by 1.8 percent.
Goods export growth slowed steadily down during 2018
According to the preliminary statistics of foreign trade of goods provided by Finnish Customs, the value of Finnish goods exports increased by 2 percent y-o-y in December whereas the value of goods imports increased by 4 percent. In 2018, the value of goods exports increased by 7 percent while goods imports increased by 6 percent. However, by looking at the goods export volumes (deflated by export prices), the latest data provided a return to negative figures. In December, goods export volume decreased by 0.9 percent y-o-y. Growth in goods export volume slowed steadily down during 2018, and in total, the goods exports volume grew only by 1.8 percent in 2018.
Finnish export suffering from the weakening global demand and supply chain problems
The Finnish industrial production continued to grow moderately in December, despite various problems in the euro area manufacturing, particularly in Germany. However, Finnish goods exports clearly took a hit in 2018 compared to 2017. Behind the drop in exports has been the weakening in global demand, particularly the slowdown in European growth. Germany has been the main destination for the Finnish exports for the last four years. Thus, the remarkably weak figures for German manufacturing confidence and output, which obviously are partly due to problems in car production, dampen also the outlook for Finnish exports at the beginning of 2019. Furthermore, problems in the supply chains of global engineering companies also troubled Finnish firms, causing delays to deliveries and providing much of the explanation behind the marked increase in inventories and very weak exports in the end of 2018. Exports will most likely see a temporary improvement when these inventories are reduced; nevertheless, our view is that global growth in 2019-20, and its composition, will no longer be as favourable for Finnish exports. Hence, export growth will slow a touch this year and decline further in 2020.



Janne Ronkanen

Senior Economist


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