The coronavirus crisis and the restrictive measures introduced to prevent its spread hit the Finnish economy harder than previously estimated, according to preliminary data (siirryt toiseen palveluun) published by Statistics Finland.
Finland’s gross domestic product (GDP) contracted by 6.4 percent year-on-year in the second quarter of 2020, and also decreased by 4.5 percent compared to the first quarter.
Statistics Finland had previously estimated that the Finnish economy would contract by about five percent year-on-year in April to June, and by just over three percent from the previous quarter.
"However, the decline is still much smaller than first feared in the spring," Janne Huovari, Forecast Manager at Pellervo Economic Research, wrote on Twitter.
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Private consumption, exports fell sharply
The preliminary data demonstrates the exceptional nature of the current recession caused by the coronavirus crisis.
For example, private consumption usually keeps the Finnish economy afloat when a recession hits the export industry, but instead consumption fell by 11 percent, year-on-year. The volume of exports also fell sharply, down by 12 percent from the second quarter of 2019.
Exports of services were especially hardest hit, falling by as much as 28 percent. Exports of goods meanwhile were down by four percent from last year.
"Above all, investments have kept the decline in Finland's GDP relatively small. They only dropped by just over a percent," Huovari tweeted, adding that the decline in investment was much greater in many other countries because restrictive measures have hampered the construction industry.
In light of that, Huovari predicted that a decline in investments in Finland will impact the economy later on.
Difficult autumn ahead for Finnish exports
Despite the latest preliminary figures, the Finnish economy seems to have emerged from the coronavirus spring with less damage than many other European countries.
In Germany, GDP fell by more than 11 percent year-on-year in the second quarter, and the decline in tourism in southern European countries has led to even sharper drops.
However, the beginning of the autumn is already looking difficult for the Finnish economy.
New orders in the manufacturing industry fell by more than ten percent year-on-year from January to June, a figure which will eventually be reflected in a decline in exports.
UPM's plans to close the Kaipola paper mill in the Central Finland city of Jämsä will have a further negative impact on exports.