Finland: Current account swings to surplus in November
The current account recorded a EUR 1.0 billion surplus in November, improving from the EUR 0.3 billion deficit posted in October (November 2021: EUR 0.7 billion surplus). Meanwhile, in the 12 months leading up to November, the current account recorded a EUR 9.5 billion deficit, improving from the EUR 9.9 billion shortfall posted in October.
The merchandise trade balance registered a EUR 1.2 billion surplus in November, which was the highest figure since December 2020 (October 2022: balanced account). The result was explained by merchandise exports jumping 28.7% over the same month last year in November, following Octobers 20.3% increase. Conversely, merchandise imports growth slowed to 14.4% over the same month in 2021 in November (October: +22.7% yoy), marking the weakest result since March 2021.
Following 2022s wider shortfall, the current account is set to post a smaller deficit in 2023. Nevertheless, a challenging global backdrop will continue to weigh on trade. Slowdowns across key European partners—albeit milder than previously anticipated—will dampen foreign demand. Meanwhile, the country is disproportionately exposed to the Russia-Ukraine war: Russia accounted for about 10% of Finlands total goods exports before the war—the highest level in the EU.
On the outlook for 2023, Bert Colijn, senior economist at ING, commented: “Exports are also set to remain under pressure in Finland […]. Concerns about Germany and China remain significant, where weak recovery in Germany is likely to dampen external demand for Finnish products, while China remains a big uncertainty in terms of how it will recover from the current wave of Covid-19.”
Analysts at the EIU added:
“The trade balance will turn into a deficit in 2022–2023 owing to elevated import prices, a weak euro and slowing external demand. At the same time, the primary income surplus is set to widen significantly in 2023 as Finnish investors divest from emerging markets. The services deficit will remain steady. We expect the current account to return to surplus only in 2027, owing to a continuously high trade deficit resulting from the weak trade competitiveness of Finnish exports under sluggish economic growth in Europe.”