Finnish economy out of recession

“Even though GDP has grown every quarter this year, there’s still no cause for great joy. The growth has matched forecasts, that is, been slow, but even some growth is a positive thing at the moment,” says Roope Ohlsbom, an economist at Suomen Yrittäjät, the Finnish SME association.

The working-day-adjusted GDP in July–September was 0.5% greater than a year previously.

Export volumes grew by 1.6% in July–September 2024 compared to the previous quarter.

“The healthy state of the United States, which has become Finland’s most important goods export market, has started to be felt here, and little by little Finnish industry is beginning to benefit from global growth,” Ohlsbom says.

VAT rise cut emerging growth

Private consumption contracted by 0.8% in July–September from the April–June level.

“Lower consumption is no surprise when you consider consumers’ continued uncertainty and the ALV rise which came into effect on 1 Sep. Domestic consumption demand plays a key role in getting the economy to grow. Much now depends on consumers’ understanding that their lot is improving as inflation has eased, purchasing power grows, and interest rates fall. If that doesn’t happen, the economy will continue to grow feebly,” Ohlsbom says.

Finnish consumers’ confidence continues to be weak.

“Right now, consumers prefer to be too cautious rather than too bold, with many saving for a rainy day. The price rises caused by tax policy push people to cut back on consumption even further at a time when consumption demand could use a jolt. The September VAT increase came at a very bad economic time,” Ohlsbom says.

Unemployment continues to rise

Unemployment continues to rise while SMEs, in particular, consider their situation to have deteriorated.

“Just like consumers, businesses are also building up their financial buffers for future crises, which is money they’re not investing. The most recent Yrittäjägallup survey shows that Donald Trump’s election as American president, in particular, has raised small employers’ concerns about the future. The threat of a global trade war is the last thing the Finnish economy needs,” Ohlsbom says.