Finnish Q1 GDP Beats Expectations

Finland’s gross domestic product rose 1.6% in the first quarter from the previous quarter, data showed on Tuesday, indicating the eurozone member was recovering from a decade-long stagnation faster than expected.

Finnish economic output is still below levels prior to the financial crisis of 2008 as exports have been hit by a string of problems including the decline of Nokia’s former phone business, rigid labor markets and a recession in neighboring Russia, Reuters reported.

A flash estimate by Statistic Finland showed first-quarter GDP was up 1.6% from the previous quarter and 2.8% higher than the previous year.

“These are very strong figures, above all forecasts ... One can assume that the economy will grow around 2% this year, which is the best pace in years for Finland, and above the eurozone average,” said economist Juhana Brotherus from Hypo Bank.

Economists noted, however, that growth in March cooled down from January and February where figures were boosted by a peak in construction revenue, a one-off ship delivery and an exceptionally weak comparison period in exports.

“The economy may grow fast momentarily, but in longer term, there are no prerequisites for growth of 3% with the ageing population, low productivity and global economic landscape,” Brotherus said.

So far, latest official growth forecasts by banks and the government vary from 1.2 to 1.8% for 2017 and from 1.0 to 2.0% for 2018.

 Brisk Export Growth

In the first three months of this year, new orders rose by 13% from the start of 2016. However more jobs are being shifted overseas, yle reported.

Exports are beginning to rise in the Finnish technology sector. The Federation of Finnish Technology Industries said on Tuesday that exports by its member companies were up by 13% in the first quarter of this year compared to a year earlier. Firms in the sector are hiring, but at a very slow pace.

Those with the strongest growth at the moment are those that have been able to take advantage of cutting-edge technology and digitalize their manufacturing processes.

Jorma Turunen, head of the technology industry lobby, told Yle that the most successful companies now are those that have managed to keep up with structural changes in the sector.

“They are providing new products and services based on digitalization or exploiting the circular economy, or taking advantage of opportunities related to climate change. A high degree of processing is the common factor,” he said. Health technology is a particularly hot field, with Internet of Things solutions playing a key role in the transformation of health services.