Fighter jets sway the current account, not competitiveness

Finland’s GDP grew 0.8% in Q1 2026 from the previous quarter, while Q2 growth slowed to 0.4%. Behind these figures is the government’s late-2021 decision to procure 64 multirole fighter jets from the United States — Finland’s largest-ever defense investment, worth roughly €10 billion, with deliveries spanning 2026–2030. This creates large quarterly swings in public investment and imports.

However, this volatility doesn’t show up the same way in domestic output: gross value added grew 0.5% in Q1 and 0.8% in Q2 — accelerating even as GDP growth slowed. The explanation is that imported fighter jets are recorded both as investment and as imports, so the hardware itself doesn’t add to GDP, while related product taxes did boost GDP in Q1.

The rising import of defense equipment doesn’t signal a competitiveness problem, since the procurement rests on a strategic government decision with no realistic domestic alternative. The resulting weakening of the trade balance in coming years should therefore not be read as a structural competitiveness issue — instead, export volumes, market shares, new orders, and cost competitiveness should be monitored alongside the headline trade figures. (AI translation)

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