New Market Research Report: Finland Business Forecast Report Q2 2013

New Country Reports research report from Business Monitor International is now available from Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 18 February 2013

Core Views - Despite stagnant economic growth in Q412, we expect that real GDP expansion will improve in 2013, particularly as Finland moves into the H213.

We believe that Finland's fiscal situation remains one of the most robust in Europe, and do not expect it to suffer from a ratings downgrade in the near future, expecting it to remain one of just four remaining countries in the eurozone to be awarded AAA status from all three major ratings agencies.

Major Forecast Changes

We have upgraded our real GDP forecast for 2013 and 2014, and expect headline growth to arrive at 0.8% and 1.5% respectively.

We have downgraded our forecasts for Finland's budget deficit, which we expect to arrive at 1.3% of GDP in 2012, and 0.8% in 2013.

Key Risks To Outlook

A deeper than anticipated eurozone recession represents a severe downside risk to our export forecasts for Finland. While we are already pencilling in a significant slowdown, a eurozone real GDP contraction of 1% or greater could severely impinge upon Finland's highly integrated export market, weighing heavily on Finland's real GDP growth in 2012 and 2013 as a consequence.

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While not our core view, due to the strong historical legacy of consensus-based political decision making in Finland, we do not rule out the possibility that the rise of the populist euro-sceptic parties could lead to more difficult domestic policy formation.

Partial Table of Contents:

Executive Summary

Core Views

Major Forecast Changes

Key Risks To Outlook

Chapter 1: Political Outlook

SWOT Analysis

BMI Political Risk Ratings

Domestic Politics

Austerity Debate Likely To Widen

- Despite downgrading our outlook on Finland's budget deficit in 2013 and 2014, we remain highly positive towards the country's fiscal and debt dynamics, which we expect will remain among the strongest in the euro area.

TABLE: POLITICAL OVERVIEW

Chapter 2: Economic Outlook

SWOT Analysis

BMI Economic Risk Ratings

Economic Activity

Growth Outlook Weak But Improving

- We have upgraded our forecasts for Finland's real GDP growth in 2013, on the back of stronger-than-expected private consumption and an improving regional economic outlook. While we are wary of reading too much into recent improvements in coincident and leading indicators, and headline real GDP readings continue to point towards economic stagnation, we believe that 2013 should mark the beginning of a gradual recovery for the Nordic economy, and now expect real GDP growth to arrive at 0.8% in 2013, from a previous forecast of 0.6%, rising to 1.5% in 2014.

TABLE: GDP BY EXPENDITURE

Balance Of Payments

Modest Improvement In External Accounts

- While we expect Finland's current account to remain in deficit, we have revised our expectations for 2013, and now expect the current account deficit to arrive at 1.2% of GDP in 2013 from an estimated 1.5% of GDP in 2012. However, we expect to see the current account deficit widen over the medium term, funded by relatively precarious financial account flows.

TABLE: CURRENT ACCOUNT

Banking Sector

Financial Union Remains Elusive

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