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Portugal out of recession, but Finland sinks

Portugal joined the ranks of EU countries coming out of recession as official data today showed the economy returning to growth in the second quarter.
The national statistics institute INE said the economy expanded 0.3% in the three months to June after contracting for the previous three quarters.
Compared with a year earlier, however, the economy shrank 3.7%, reflecting a fall in exports and investment. In July, the central bank estimated that the economy would contract 3.5% this year and another 0.6% in 2010.

Germany and France, the EU’s two largest economies, grew 0.3% in the second quarter as the euro zone as a whole shrank just 0.1%. Many economists believe the region will be in positive territory for the third quarter.

But other figures released today showed that Finland sunk into the deepest recession in the euro zone. Official data showed that its economy shrank by a record 9.4% in the second quarter on a 12-month comparison.

The drop is the Nordic country’s biggest annual decline since comparable figures began to be compiled in 1990 and is worse than the 7.6% year-on-year drop registered in the first three months of this year.

Finland’s economy is heavily reliant on exports which have been hit by the heavy slump in global demand. Statistics Finland, the official data agency, said the economy shrank by 2.6% in second quarter, compared to a revised figure of -3%in the first, indicating only a very slight easing of the recession.
Finland’s growth figures are the worst in the 16-nation euro zone. Among fellow European Union members, only the economies of Estonia, Latvia and Lithuania saw deeper negative growth than Finland in the second quarter.
Finnish companies are feeling the pinch as a result of the downturn. Nokia has seen a quarter of its revenues wiped out, while paper producers Stora Enso and UPM-Kymmene are slashing production and jobs owing to the decline in newspaper sales and advertising.

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