Finnish economic growth exceeds flash estimate in Q1 2016

Statistics Finland today released the preliminary data of Finland’s GDP for the first quarter of 2016. The Finnish economy grew 0.6% on a sequential basis, above the flash estimate of 0.4% growth. Moreover, the GDP growth rate for Q4 2015 was considerably revised upward to 0.5% q/q from the earlier figure of 0.1%. On a year-on-year basis, the Finnish economy grew 1.6% in Q1 2016.

Foreign trade and domestic demand both contributed 0.3 percentage points to the sequential growth. Exports volume dropped 1.1% q/q and 2.6% y/y in Q1 2016. Meanwhile, imports dropped 1.8% q/q and 2.2% y/y in the first quarter.

The volume of private consumption came in slightly above expectations, growing 0.6% q/q and 1.7% y/y. On the other hand, public consumption dropped in the first quarter of 2016. Gross fixed capital formation, or investments, rose 0.4% q/q and 0.2% y/y. Investment in construction grew 3.4% q/q; however, machinery and transport equipment investment declined sharply.

Given the fresh data and the revisions to the prior quarter, projections are likely to be upwardly revised, said Nordea Bank in a research report.

“Using our own GDP forecast profile and the revised history, we end up with a 1.3% GDP growth estimate for 2016, which is a lot higher than the current 0.5%”, added Nordea Bank.

However, the sluggishness in foreign trade remains a major concern. Declining exports and imports indicate a sign of weak domestic activity.