Stagnating GDP growth and rising inflation

Compared to the previous quarter the increase of exports of goods has not occurred so far during 2008. During the second quarter exports of goods decreased by 1.1 percent compared to the previous quarter while an increase of only 1.3 percent was seen during the first quarter. Imports of goods and services have also performed poorly – goods came to a standstill during the second quarter and services declined almost 1 percent. Merchanting, which has contributed to GDP growth in a very considerable way for a number of years, had a slightly restraining effect on GDP growth.

Household consumption rose at a comparatively good rate of 2.2 percent compared to the second quarter of 2007. However, parts of the household consumption are affected by calendar effects, which are not adjusted for in the national accounts. Calendar adjusted consumption growth during the second quarter may have been about 1 percentage point lower than the actual figure that was recorded.

Labour productivity in the business sector continued to drop. The number of hours worked increased considerably more than output, and figures for the first half of 2008 show a productivity decrease that is the largest since the IT crisis in the beginning of the last decade. The productivity growth for goods producers has been especially unfavourable, with a sharp fall from the second half of 2007 to the first half of 2008.

Total employment continued upwards but the growth rate was lower than during the first quarter.  The number of employed people with non-permanent jobs was lower than one year earlier. This was the case in the first quarter too and can be seen as a new trend compared to the previous development.

At the same time as there has been a weaker GDP growth, the price increases according to the consumer price index have accelerated. In August the inflation rate was 4.3 percent, which is a higher rate than in fifteen years.  A large part can be explained by higher import prices, primarily on food and oil, and by the increasing interest rates. However, the price increases have not affected the whole economy.