Economy rebounds in Q4 2025

Downwardly revised reading undershoots market expectations: Finland's GDP grew by 0.3% on a seasonally adjusted quarter-on-quarter basis in Q4, rebounding from a 0.1% contraction in the previous quarter. While this marked the strongest expansion since Q3 2024 and outpaced the euro area’s 0.2% average, the result fell short of both the preliminary estimate of a 0.6% rise and market expectations. On a calendar-adjusted year-on-year basis, GDP expanded 0.5% in Q4, following a 0.1% contraction in the previous quarter. In 2025 as a whole, GDP growth slowed to 0.2% from 0.4% in 2024, remaining below the average of the past decade.

Private consumption and investment drive growth: Relative to the previous period's data, readings in Q4 improved for private consumption (+0.4% in seasonally adjusted quarter-on-quarter terms vs +0.3% in Q3) and fixed investment (+1.7% vs +0.1% in Q3). Despite a sluggish construction sector, all investment categories grew toward year-end, supported by data centers, stabilizing housing construction, and robust growth in R&D. In contrast, readings worsened for government consumption (-0.6% vs +1.5% in Q3), imports of goods and services (-0.9% vs +3.0% in Q3) and exports of goods and services (-3.4% vs +3.1% in Q3). The sharp drop in exports was due to a high base effect caused by the delivery of a large ship in Q3.

GDP growth to pick up in 2026: Our Consensus is for quarter-on-quarter GDP growth to remain broadly steady in Q1 2026, a projection supported by strong monthly growth in economic activity and goods exports in January. After marginally expanding in 2025, Finland’s economy is projected by our Consensus to record its strongest expansion in five years in 2026. While rising incomes and recent wage agreements will support a recovery in private spending, momentum will likely be tempered by weak residential investment and fiscal consolidation.

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