Finnish economic recovery accelerated early this year

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By Petri Sajari
     
      The Finnish economy is in a relatively fast recovery from the recession.
      In the early part of the year gross production rose by 5.5 per cent compared with the same time last year, according to Statistics Finland.
      Of the industrial sectors, engineering grew strongest. Output in the metals industry grew by 13.5 per cent in the period under comparison.
      The second-highest growth rate, 9.4 per cent was in the wood and paper industry.
     
The strength of the relative growth in production is explained partly by the fact that at the beginning of last year, output was cut down by a harbour strike.
      Unless there is a significant dip in economic growth this year, Finland’s GDP will grow to the level where it was before the current recession.
      GDP – gross domestic product – measures the combined value of goods and services produced for end use in a certain period of time.
     
Researcher Hannu Kaseva at the Research Institute of the Finnish Economy (ETLA) warns that the high growth figures of the past couple of quarters give a deceptively positive picture of the state of the economy.
      He emphasises that the sharp decline in GDP during the recession meant that losses of tax revenue were considerable.
      “Annual growth should be at about five per cent in the future as well, if financing of the public economy in 2015 is to be be as strong as it was before the economic crisis. Such a strong and unbroken period of growth is very unlikely”, Kaseva says.
     
It is emblematic of economic growth that after a recession, overall production shows powerful growth for a short time, and then slows down somewhat after the opening spurt.
      In 2009 Finnish GDP shrunk by 8.2 per cent. Fortunately for Finland, the unemployment rate did not rise to more than half of what it was during the recession of the 1990s.
      A relatively slow recovery began already in the second quarter of 2009.
     
Based on figures from the early part of this year, the most positive news is growth in investments, because it indicates an improvement in prospects for businesses.
      If the prospects look bad, companies shy away from making new investments, preferring to hold on to money that they have.
      Investments grew in January-March by nearly ten per cent compared with the early part of 2010.
     
Positive prospects for Finnish households were reflected by an increase in private consumption early this year.
      According to a survey published last week by Statistics Finland, the confidence of consumers in their own finances improved in May, but confidence in the Finnish economy weakened.
     
Helsingin Sanomat / First published in print 4.6.2011


Previously in HS International Edition:
  OECD predicts strong recovery for Finnish economy (19.11.2010)
  Finnish exports up by a quarter in September (10.11.2010)

PETRI SAJARI / Helsingin Sanomat
petri.sajari@hs.fi