Finland: Economy gains momentum in Q3
Sequential growth meets market expectations: A revised national accounts release revealed that economic growth accelerated to 0.3% in Q3 in seasonally adjusted quarter-on-quarter terms. The reading outpaced Q2’s 0.1% rise and was largely in line with market expectations. That said, it fell short of both the preliminary estimate and the Euro area average of 0.4%. On an annual basis, the economy rebounded 0.8% in Q3 (Q2: -1.2% yoy), marking the first expansion in one-and-a-half years.
Fixed investment and net trade fuel improvement: Domestically, the quarterly upturn came at the heels of a 0.4% rise in fixed investment, which recovered from Q2’s 1.8% decline and marked the fastest increase in over two years amid monetary easing by the ECB. Moreover, household spending fell at a softer clip of 0.8% in the third quarter (Q2: -1.1% qoq s.a.). Less positively, public spending posted the weakest result in a year, contracting 1.9% (Q2: +0.7% qoq s.a.).
On the external front, exports of goods and services growth moderated to 1.6% in Q3 (Q2: +8.7% qoq s.a.). Meanwhile, imports of goods and services growth moderated to 0.3% in Q3 (Q2: +2.1% qoq s.a.). As a result, net trade contributed positively to overall GDP growth.
Economy to expand robustly ahead: Our panelists expect sequential growth to broadly stabilize through Q4 2025. As a result, the economy is forecast to rebound in 2025 after contracting for two consecutive years. Low inflation and laxer borrowing conditions will fuel a sharper increase in private spending and a recovery in fixed investment, while stronger EU demand will buttress exports. The health of the German and Swedish economies plus the extent of U.S. tariffs under President-elect Trump are key risk factors.
Panelist insight: SEB’s Mihkel Nestor commented:
“The economy is set to benefit gradually from lower interest rates. We expect GDP to contract by 0.5 per cent in 2024, with a projected recovery of 1.5 per cent in 2025 and 1.8 per cent in 2026. […] Due to Finland’s relatively high household debt levels, including a high share of floating rates, lower interest rates will have a stronger positive impact on purchasing power than in many other countries. Alongside a stronger labour market, this is expected to drive consumption higher during our forecast period.”