Finnish exports to Russia drop; central bank downgrades economic forecast

YLE NewsEye on the Arctic

Finnish exports to Russia dropped sharply in the last quarter, putting Germany in the top spot for international sales, according to new figures.

Machinery, equipment and the chemical industry suffered the biggest declines in exports to Russia. Imports from Finland’s eastern neighbor also fell significantly compared to the previous year, though Russia remains the largest source of imports, the vast majority of which are energy commodities.

Problems with Russian trade at the start of the year mean that Germany overtook Russia to become Finland’s largest trading partner, new figures show.

Finnish Customs data for the first quarter of 2014 show that exports to Russia dropped 16 percent compared to the year before. Imports from Russia also fell, at a sharper rate of 18 percent.

The change in ranking of export partners marks a notable shift compared to recent years. Russia has been Finland’s largest trading partner in turnover terms since 2007.

According to Finnish Customs, exports began to weaken at the end of 2013. Machinery, equipment and the chemical industry experienced the strongest declines in sales to Russia. Exports of petroleum products also suffered.

Of the main commodity groups, only transportation equipment exports grew at the start of the year.

The new figures show that Russia remains Finland’s largest source of imports. The vast majority of imports from Russia -- over 83 percent -- were energy commodities.

Bank of Finland: No economic growth this year

Finland’s central bank has lowered its economic forecast for 2014.

The Bank of Finland now expects zero growth this year with 1.5 percent growth.

The Bank of Finland’s new economic forecast, issued earlier in the month, paints a grim picture of the country’s economic fortunes. The bank now expects zero growth in gross domestic product this year -- down from a forecast of 0.6 percent growth offered in November 2013.

Although there are signs of an uptick in the economy, that will not be enough to make the figures for the whole year positive.

“Finland’s GDP has been declining without a break since the second half of 2012,” said the executive summary of the bank’s economic outlook.

“Spring 2014 has, however, brought signs of a brighter phase in the economic cycle, and, together with faster international growth, GDP is expected to begin growing again during the course of 2014.”

The bank expects the economy to grow 1.5 percent in 2015 and the same again in 2016.

This story is posted on Alaska Dispatch as part of Eye on the Arctic, a collaborative partnership between public and private circumpolar media organizations.