Finland Avoids Technical Recession Even as Economy ContractsKati Pohjanpalo
Finland avoided a recession after revised data showed the economy grew in the third quarter of last year before sinking into decline three months later.
Fourth-quarter gross domestic product, adjusted for seasonal swings, contracted 0.5 percent from the three months through September, when it grew a revised 0.1 percent, Statistics Finland in Helsinki said today on its website. The fourth-quarter decline matched the median estimate of economists surveyed by Bloomberg. Output sank 1.5 percent from a year earlier, more than the 1.2 percent contraction foreseen in the Bloomberg survey.
“The general criterion for recession of two successive quarters with a decline in the volume of GDP is not fulfilled,” the statistics office said in the statement. “However, as GDP for the whole year is lower than in the previous year, last year can be regarded as a year of recession in the Finnish economy.”
Finland’s economy, which shrank 0.2 percent in 2012, is reeling from the fallout of the euro area’s debt crisis, which has plunged the single currency bloc into a recession. Exports account for about a third of Finnish output, making the $250 billion economy vulnerable to shifts in global trade.
The euro area shrank 0.6 percent in the fourth quarter after contracting 0.1 percent in the third, according to preliminary data. That’s the worst performance since the first quarter of 2009 in the aftermath of the collapse of Lehman Brothers Holdings Inc. Germany’s economy, Europe’s biggest, also slumped 0.6 percent in the final three months of last year.
Finnish exports contracted 4.4 percent while consumer spending expanded 0.9 percent from the prior three months.
The government’s budget deficit widened to 1.9 percent of GDP in 2012 from 0.8 percent and its debt load grew to 53 percent from about 49 percent. That includes guarantees to the European Financial Stability Facility.