Finland’s economy may have contracted in the second quarter as the European debt crisis weighs on exports in the northernmost euro member.
Second-quarter seasonally adjusted gross domestic product shrank 1 percent from the prior three months, Helsinki-based Statistics Finland said today on its website, citing preliminary data based on the trend indicator. In the first-quarter, the economy grew 0.8 percent, according to quarterly national accounts, which have a different calculation method.
Finance Minister Jutta Urpilainen last week said that growth next year may be “between zero and 1 percent” as the debt crisis weighs on exports, lowering a 1.2 percent forecast. The government expects a budget deficit of 6.6 billion euros ($8.2 billion) next year and plans 1.3 billion euros in tax increases and 400 million euros in spending cuts.
Finland’s economy has been buoyed by domestic spending amid record low interest rates. The European Central Bank’s record-low 0.75 percent rate has fed through to the Nordic economy, where more than 93 percent of mortgages are linked to variable interest rates.
Statistics Finland is scheduled to publish second-quarter GDP figures on Sept. 5.