2013-02-28 15:04:11 - New Country Reports research report from Business Monitor International is now available from Fast Market Research
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%
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.
Full Report Details at
- www.fastmr.com/prod/536356_finland_business_forecast_report_q2_2 ..
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.
Report Table of Contents:
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
BMI Political Risk Ratings
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
BMI Economic Risk Ratings
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
Financial Union Remains Elusive
- The eurozone banking sector has struggled in recent months on the back of the regional economic slowdown. However, with a pick-up in growth expected in 2013, and given the reduction in near-term systemic crisis risks, we expect a stronger showing in 2013 . Over the longer term, the formation of a banking union - currently being debated by member states - will be instrumental in stabilising the eurozone banking system and fostering sustainable growth.
Exchange Rate Policy
Euro Downtrend: Temporary Disconnect
- Having rallied into the third quarter following the European Central Bank (ECB)'s pledge to purchase encumbered eurozone sovereign debt (conditional on the target member state first agreeing to a structural macroeconomic adjustment program), the euro is now hovering around US$1.3000/EUR. This would ordinarily suggest potential for a more pronounced rally towards US$1.4000-1.4500/EUR. However, we believe that, while momentum could carry the euro towards US$1.3500/EUR, this would eventually give way to a fresh round of depreciation.
Chapter 3: Key Sectors
TABLE: TELECOMS SECTOR - FIXED-LINE - HISTORICAL DATA & FORECASTS
TABLE: TELECOMS SECTOR - INTERNET - HISTORICAL DATA & FORECASTS
TABLE: TELECOMS SECTOR - MOBILE - HISTORICAL DATA & FORECASTS
Chapter 4:BMI Global Assumptions
Growth May Be Turning The Corner
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH FORECASTS
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS (%)
TABLE: EMERGING MARKETS, REAL GDP GROWTH FORECASTS
About Business Monitor International
Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010
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