Finnish Economy Keeps Quarterly Pace in Export-led Rebound
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Loading... - Flynn Abbey
- 30 Aug 2024
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Finland's economy has demonstrated its ability to bounce back, with a 0.3% growth in gross domestic product (GDP) in the second quarter, driven primarily by exports. This growth is in line with earlier projections, indicating that the country is on track for a more sustained recovery.
The 8.1% increase in the volume of exports from the previous quarter is a significant contributor to the country's growth. This surge in exports suggests that the recovery in Finland's main markets is gaining momentum, with the local industry gradually regaining its footing.
While exports have been a driving force behind Finland's growth, domestic demand remains sluggish. Private consumption declined 1.1% in the second quarter, and investments dropped 2.1%. Public spending, however, grew 1.2%. Retail sales also declined 2.1% on year in July, indicating that household demand remains weak.
Despite the challenges, most economists expect a recovery next year, driven by rising purchasing power due to slowing inflation and interest rate cuts by the European Central Bank. The Finance Ministry predicts a rebound to 1.6% growth next year and 1.5% gain in 2026, which is in line with median forecasts.
Prime Minister Petteri Orpo's government has announced €9 billion worth of austerity measures to address the country's public finances. The plan aims to spur growth and create 100,000 new jobs in the labor market. However, Fitch Ratings has criticized the plan as "insufficient" and cut its outlook on Finland's AA+ credit rating.
Finland's economy has shown resilience in the face of challenges, with exports leading the way. While domestic demand remains weak, the country is expected to recover next year. The government's austerity measures will be crucial in addressing the country's public finances and driving growth. As the economy continues to evolve, it will be important to monitor the impact of these measures and the overall performance of the Finnish economy.
