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Finnish Economy Posts Third Quarterly Gain in a Sign of Recovery

(Statistics Finland)

(Bloomberg) -- Finland’s ailing economy grew for a third consecutive quarter in an upbeat signal that contrasts with analysts’ projections of another full-year contraction.

Gross domestic product in the northernmost euro area economy expanded a seasonally adjusted 0.4% in the July-to-September period after growing 0.3% in the previous quarter, according to a flash estimate by Statistics Finland on Thursday. GDP also grew 0.4% from a year ago, adjusted for working days.

The latest reading follows two consecutive quarters of meager growth in the Nordic economy, which has been one of the worst performers in Europe for the past two years. The third-quarter growth contrasts with recent projections from forecasters including at the Finance Ministry, with estimates compiled by Bloomberg foreseeing a 0.4% fall this year.

“There are positive signs in the air as the Finnish economy has started to recover from the recession,” said Roope Ohlsbom, an economist at Suomen Yrittajat, an organization representing small and medium-sized enterprises. Finland’s economic growth will be further supported by falling interest rates, low inflation and growth in service exports during the rest of the year, Ohlsbom wrote in a note to clients. 

The Finnish economy is set to emerge next year from the slump triggered by the freezing of trade with Russia as a result of the Kremlin’s full-scale invasion of Ukraine alongside sluggish demand from top trading partners Germany and Sweden. 

Last week, International Monetary Fund said it expects the Finnish GDP to grow by 1.6% in 2025, driven by a partial recovery of private investments and consumption amid falling interest rates and stabilizing house prices. 

--With assistance from Joel Rinneby.

©2024 Bloomberg L.P.