Finland’s economy contracted the most since the onset of the Covid-19 pandemic as the drop in demand for exported goods as well as higher borrowing costs weigh on the Nordic economy.

Gross domestic product shrank a seasonally adjusted 0.9% in the three months through September compared with the second quarter, when it expanded 0.6%, according to a flash estimate by Statistics Finland on Tuesday.

Economists including the Bank of Finland have projected a mild recession for the Finnish economy this year as the export-driven Nordic nation is hit by weaker demand for its goods. Finland is also constricted by the mounting cost of credit as the European Central Bank’s rate hikes have fed fast into the economy where more than 95% of mortgages are tied to variable interest rates, hurting consumer spending.

Read More: Finland Set for Slow Recovery From Recession, Central Bank Says

Last month the Finance Ministry forecast a return to growth in 2024 after stagnation this year, spurred by a revival of global demand as interest rates reach a peak. In contrast, other economists, including at Nordea Bank Abp, expect to see no growth next year. Nordea is projecting a second year of stagnation in 2024, citing an expectation that global demand for export industries will stay sluggish and that residential construction will endure a further slowdown.

Read More: Finland Sees Economy Recovering From Stagnation Next Year

--With assistance from Artyom Danielyan.