Country Economic Forecasts > Finland

Revised figures show that Finland managed to avoid a return to recession in Q4 2015, with GDP rising 0.2% on the quarter. Despite a weak performance in H2, the economy managed to achieve positive growth for the full year for the first time since 2011, but at just 0.5% the pace remains very sluggish. The GDP breakdown continued to show a negative contribution from net exports, with the external sector still hard hit by the recession in Russia, one of Finland's main trading partners. On the other hand, domestic demand showed some resilience, with fixed investment in particular posting a strong rebound.Survey and confidence indicators appear to show signs of improvement. The trend indicator of output, a good proxy for GDP growth, rose in January, which suggests positive growth in Q1. But we expect the economy to improve only very gradually, with expansion seen at just 0.7% this year. Our forecast then shows growth accelerating to 1.2% in 2017 and around 1.6% a year in 2018-19.Despite the slight improvement in economic activity, Fitch recently cut Finland's rating to AA+ citing the poor economic performance. Furthermore, in the long run Finland still needs to address its high labour costs, reverse the declining labour participation rate and move onto a new industrial path following the demise of its all-important electronics and forestry industries in recent years.