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GDP grows slightly in Q1 2024
Statistics Finland reports that Finland’s GDP volume grew in January–March 2024 by 0.2% on the previous quarter. Working-day adjusted GDP was 1.2% less than a year previously.
“However, there is no cause for great joy yet. The technical end of the recession means that the Finnish economy is about to turn the corner and that the bottom has been reached,” says Petri Malinen, an economist at Suomen Yrittäjät.
The volume of exports decreased in January–March 2024 by 4.6% from the previous quarter, while the volume of imports decreased by 0.5%.
“This reinforces the picture that even though the economy is recovering in the key market regions for Finland, the Finnish economy has not yet gained speed from the recovery of the global economy. Of course, the industrial action which happened during the period make the figures even weaker than usual,” Malinen says.
“VAT increase will destroy end-of-year growth”
Private consumption grew in January–March 2024 by 1% from October–December.
“This moderate growth is positive, because consumers play a key role in achieving economic growth. Much depends on consumers’ understanding that their lot will improve as inflation eases, purchasing power grows, and interest rates fall. If that does not happen and the domestic market does not recover, economic growth will remain muted,” Malinen says.
Finnish consumers’ confidence continues to be weak.
“Consumers appear to be unnecessarily pessimistic and are building a buffer for a rainy day instead of spending normally. We can only hope that the interest-rate cut expected next week will imbue consumers with additional trust,” Malinen said on 31 May.
The poor state of public finances also clouds consumers’ perception of the economy.
“The Government’s decision to raise VAT, which consumers will feel in their pockets, reinforces the negative cycle. The fact is that the VAT increase will destroy end-of-year growth in the economy this year,” Malinen says.
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