Business News/ News / World/  Economy of this European country emerged surprisingly resilient to covid

Finland’s economy is starting to emerge as an outlier in its ability to withstand the Covid-19 crisis.

Gross domestic product, adjusted for seasonal variations, contracted 4.5% last quarter, Statistics Finland said on Friday. In the euro area, GDP fell more than 12% from the first quarter.

When adjusting for the number of working days, Finnish GDP shrank 6.4% from a year ago, which “compared to most of Europe," is “modest," Danske Bank said in a client note. “Recovery has begun during the summer," the bank said, though it also warned that Finland’s reliance on exports could hamper its economic rebound.

Nordic economies are so far suffering milder Covid recessions than the rest of Europe. Part of the explanation may lie in the region’s commitment to universal health care and a solid social safety net, according to economists at HSBC.

What Bloomberg’s Economists Say...

In the euro area, “government measures to contain the pandemic shuttered vast swathes of the economy, prompting a plunge in output. With lockdowns lifted and the virus seemingly under control, the focus was then on getting Europeans back to work. Real-time indicators show a substantial rebound going into the summer, which is now slowing. Social distancing rules, together with consumer and corporate caution, are acting as a ceiling on activity."

-- Jamie Murray and David Powell, Bloomberg Economics. For full primer, click here

Finland imposed a softer lockdown than neighboring Denmark and Norway, though its restrictions were tighter than in Sweden.

Finnish imports, exports and private spending all shrank more than 10% from a year earlier, while government spending and investments fell around 1%. The quarterly GDP contraction is the biggest since the financial crisis a decade ago, and more than a flash estimate had indicated.

The government has increased spending to help the economy past the slump and Prime Minister Sanna Marin told Kauppalehti further budgets are planned for 2020.

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Updated: 29 Aug 2020, 11:13 AM IST
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