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"Romping like a young foal": Finnish economy dodges recession fears

The Finnish economy has expanded by 2.2 percent in the past year, dispelling recession fears – for now.

Ostoskeskus Iso Omena Espoossa.
Growth is being driven by private consumption. Image: Henrietta Hassinen / Yle

"No sign of recession: Finland's GDP romped like a young foal in the third quarter," wrote Danske Bank economist Jukka Appelqvist in a tweet responding to data showing solid economic growth in the summer and early autumn.

The volume of Finland’s gross domestic product (GDP) rose by 0.7 percent in the July-to-September period, compared to the previous quarter, Statistics Finland said on Friday as consumers flocked to Black Friday sales.

Compared with the third quarter of 2018, GDP was up by 2.2 percent – outpacing the Bank of Finland's projection of 1.6 percent growth this year.

Danske Bank described the results as stronger than expected, observing that "last year looks surprisingly weak in retrospect [as] Finland went to the gates of a recession and GDP basically remained in place for three quarters. At the same time employment rose sharply, unlike this year."

"The construction boom has turned into a mild slump, which will probably continue in early 2020. Households' purchasing power will continue to grow, which will help to boost consumption, not counting services," Danske Bank adds.

Private consumption in the third quarter was 2.4 percent higher than a year earlier, up by 1.5 percent from the spring and early summer. Investments, too, were up, as were imports.

Exports were also strong, with volume up by 5.3 percent year-on-year and by half a percent from the previous quarter.

"Pushing forward in a headwind"

Economists were generally bullish about the latest figures.

"The Finnish economy just keeps pushing forward in a headwind. Last year were near at stagnation instead. This Finnish GDP trend is quite unusual and differs clearly from the rest of Europe," tweeted Markku Lehmus, head of forecasting at the employer-owned Research Institute of the Finnish Economy (Etla).

At the Confederation of Finnish Industries (EK), chief economist Sami Pakarinen pointed out that growth is being driven by private consumption.

"The Finnish economy is growing at a good rate. Now we should ask why. Last year we saw extremely feeble growth. Almost in a technical recession. We're now largely moving ahead based on private consumption," Pakarinen wrote on Twitter.

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