EU country’s economy shrinking

01.12.2022 22:18

EU country’s economy shrinking Getty Images / petriartturiasikainen

Finland’s economy has continued to decline, contracting more in the third quarter than a previous estimate indicated, official statistics revealed on Wednesday.

Statistics Finland data showed that GDP shrank 0.3% last quarter from the previous three-month period, ending five consecutive quarters of growth. In the year, the economy grew 1.0%, adjusted for the number of working days.

“The consumption of goods like food and fuel has declined since mid-2021, but now households are clearly reducing consumption on semi-durable goods such as clothes and shoes,” said senior statistician Samu Hakala.

According to the report, the economic downturn was led by a slump in private spending.

“We expect to see a contraction also in the fourth quarter, which would technically mean a recession for the Finnish economy,” Helsinki-based chief economist at Svenska Handelsbanken AB, Timo Hirvonen, wrote on Twitter.

Economists expect a shallow but protracted recession in Finland to last into 2023. A recent report from Oxford Economics also indicated that the near-term outlook is bleak.

“High inflation is seeping into core prices, squeezing real incomes and denting confidence, while the ECB hikes rates. We see growth of 2.3% in 2022 and 0% in 2023, although there’s great uncertainty around the outlook,” the report said, noting that a slowdown is “imminent,” with record-low consumer confidence and weakening business confidence across sectors.