Finland’s economy shrank in the first quarter, entering a recession as its fellow euro-area countries struggle with austerity and surging unemployment.
Gross domestic product, adjusted for seasonal swings, contracted 0.1 percent from the prior three months, when it shrank a revised 0.7 percent, Statistics Finland in Helsinki said today on its website. The slump matched the median estimate of three economists in a Bloomberg survey. The economy also stalled in the third quarter, after being revised from 0.1 percent growth, data showed.
“Finland’s economy is zigzagging downhill,” said Pasi Sorjonen, economist at Nordea Bank AB in Helsinki. “We’re on a clear downward trend where at times the official recession criteria are fulfilled and at times they aren’t.”
Finland’s economy, where exports account for about a third of output, is hurting amid falling demand in the euro area, which is shrinking for the second year as austerity policies erode spending. Domestic demand in Finland, home to struggling mobile phone maker Nokia Oyj, is failing to compensate, with consumer spending contracting an annual 0.5 percent, the statistics office said.
The euro area shrank 0.2 percent in the first quarter after contracting 0.6 percent in the fourth, according to preliminary data. Germany’s economy, Europe’s biggest, expanded 0.1 percent from the prior three months, less than the 0.3 percent gain estimated by economists.
Finnish exports contracted an annual 4 percent last quarter and manufacturing shrank 5.1 percent in the year, the statistics office said. Adjusted for working days, the economy shrank an annual 2.1 percent, more than the 2 percent drop estimated by economists.
In the quarter, exports rose 0.9 percent and private spending grew 0.3 percent from the prior period.
“Today’s figures were odd, given nothing’s really contracting from the previous quarter,” Sorjonen said. “The GDP figure maybe relies more on production data than on the demand and import data.”
The recession is weighing on the labor market, prompting companies including publisher and broadcaster Sanoma Oyj and telecommunications operator TeliaSonera AB to cut jobs. The unemployment rate rose to 8.8 percent in the first quarter from 8 percent a year earlier.
Statistics Finland revises prior data with each publication. It had originally reported a third-quarter drop of 0.1 percent, revised that to a 0.1 percent increase before saying today the economy was flat in the three months through September. It also revised the fourth-quarter decline to 0.7 percent from 0.5 percent.
“I expect today’s figures to be later revised quite significantly,” Sorjonen said.