Finnish 2010 growth capped by Nokia struggles

HELSINKI, FINLAND: Finland's economy grew 3.1 per cent last year, a touch below most forecasters estimates as the struggles of flagship company Nokia kept a lid on an otherwise healthy recovery.

"We had all the reasons to expect at least 3.5 per cent growth. But still it tells us that the recovery of the Finnish economy is clearly continuing," said Lauri Uotila, senior advisor for Sampo Bank. Export-dependent Finland saw its economy shrinking 8.2 per cent in 2009 as demand for its paper, mobile phones, ships and machinery collapsed in the midst of the global crisis.

Over 2010, exports of goods was up 10 per cent, but those of services fell about 7 per cent.

Analyst said the weak service exports are substantially due to Nokia, the troubled mobile phone maker, whose Finnish sites focus on software and services for the phones it sells globally.

"Exports of services were surprisingly bad and I think Nokia contributed a lot to that," said Timo Hirvonen, economist in OP-Pohjola.

Nokia, still the largest phone maker by volume, saw its profits and market share shrink fast in 2010 as it struggled to catch up with Google and Apple on the smartphone sector.

Finland's economy expanded 5.2 per cent in the fourth quarter versus a year ago. The volume of exports grew 6.6 per cent from the previous quarter and 6 per cent year-on-year.