Finland

Economic and political outline

Economic indicators | Foreign Trade in figures | Sources of economic information | Political outline

Economic indicators

The GDP growth rate was 5.5% higher in 2006 than in 2005, but economic activity leveled off in the latter half of the year. GDP is predicted to grow by 3.1% in 2007, while 2008 is likely to show a slower rate of growth, estimated at 2.7%. The highly industrialized, largely free-market economy has per capita output roughly that of the UK, France and Germany. Unemployment decreased significantly since 1994 to 7.7% in 2006 and is expected to drop to 7.1% in 2007. A relatively inflexible labor market and high employer-paid social security taxes hamper growth in employment. The inflation rate has remained in Finland below the OECD average. The annual rise in consumer prices exceeded the 2% mark at the end of 2006 for the first time in five years. Nearly half of the overall rise in consumer prices derived from increased cost of housing and higher interest rates. The government budget will remain comfortably in surplus, despite tax cuts.

GDP Indicators	2004	2005	2006	2007	2008
GDP (billions USD)	189.41	195.79	209.77	236.13e	251.33e
GDP (constant prices, annual % change)	3.7	2.9	5.0	4.3e	3.0e
GDP per capita (USD)	36,228.95	37,320.20	39,993.57	44,911.86e	47,690.41e
General government balance (in % of GDP)	2.1	2.5	3.7	4.3e	3.8e
Inflation rate (%)	0.1	0.8	1.3	1.5e	1.8e
Unemployment rate (% of the labor force)	8.8	8.4	7.7	6.7	6.5
Current Account (billions USD)	14.67	9.58	10.86	11.70e	12.58e
Current Account (in % of GDP)	7.7	4.9	5.2	5.0e	5.0e

Source: IMF - World Economic Outlook Database

Note: (e) Estimated data

Socio-demographic indicators	2006	2007	2008
Unemployment rate (%)	7.7	6.7	6.5

Source:

Main sectors of industry

Finland's key economic sector is manufacturing - principally the wood, metals, engineering, telecommunications, and electronics industries. Trade is important; exports equal two-fifths of GDP. Except for timber and several minerals, Finland depends on imports of raw materials, energy, and some components for manufactured goods. Wood, pulp and paper industries are well developed and represent Finland's core export base. Telecommunications is the main industrial sector; especially world leader in mobile telephony company Nokia constituting an important share of country's exports. Because of the climate, agricultural development is limited to maintaining self-sufficiency in basic products and Finland's EU accession has further accelerated the process of restructuring and downsizing of this sector. Agriculture presents less than 3% of the GDP today. Forestry, an important export earner, provides a secondary occupation for the rural population.

Breakdown of economic activity by sector	Agriculture	Industry	Services
Value added (annual % change)	1.6	-0.8	3.1
Value added (in % of GDP)	2.9	29.6	67.5
Employment by sector (in % of total employment)	4.8	25.6	69.4

Source: World Bank - World Development Indicators - last available data.

Monetary indicators	2002	2003	2004	2005	2006
Average annual exchange rate for 1 USD	1.06	0.89	0.81	0.80	0.80

Source: World Bank - World Development Indicators

Foreign trade in figures

Finland has a highly industrialized, largely free-market economy that relies heavily on exports. Exports of goods and services contribute 32% of Finland's GDP; about 40% of the goods and services produced in Finland are exported. In 2007 the EU countries accounted for 56.8% of Finland's exports and 56.0% of imports. Exports to EU countries grew by 6% over the previous year and imports from the EU to Finland by 9%.

The policies conducted between 1996 and 2000 (privatisation, decentralisation, reform of the labour market , etc.) saw the state economy recording important improvements which now rank the country among the best growth performers in the European Union. These good results make the Finnish market more attractive to exporters especially since setting up a business there opens the door to Scandinavia , Russia and Baltic States. Furthermore the increase in the Finnish consumers' purchasing power has boosted Finnish imports.

Foreign trade indicators	2002	2003	2004	2005
Imports of goods (millions USD)	32,022	39,791	48,369	55,888
Exports of goods (millions USD)	44,862	52,740	61,139	65,450
Imports of services (millions USD)	8,073	10,007	12,285	15,203
Exports of services (millions USD)	10,441	11,471	15,170	17,007
Imports of goods and services (annual % change)	1.8	2.9	6.0	10.3
Exports of goods and services (annual % change)	5.0	1.4	5.6	7.0
Imports of goods and services (in % of GDP)	30.4	30.7	32.4	35.2
Exports of goods and services (in % of GDP)	38.3	36.9	37.8	38.7
Trade Balance (millions USD)	12,840	12,948	12,770	9,562
Trade Balance (including service) (millions USD)	15,209	14,413	15,655	11,367
Current Account (millions USD)	13,929	10,727	14,826	9,517
Current Account (in % of GDP)	10.5	6.6	8.0	4.9
Foreign trade (in % of GDP)	68.7	67.6	70.2	73.9

Source: World Bank - World Development Indicators

Main partner countries

Main customers (% of exports)	2006
Germany	10.6%
Sweden	10.4%
Russia	10.0%
United Kingdom	6.2%
United States	6.2%

Main suppliers (% of imports)	2006
Russia	14.9%
Germany	13.9%
Sweden	10.5%
China	6.0%
United Kingdom	4.4%

Source: 2006

Main products

Main exports (% of exports)	2006
Electrical machinery and equipment	21.2%
Paper	13.6%
Machinery and mechanical appliances	12.6%
Iron and steel	6.9%
Vehicles other than railway or tramway	5.4%

Main imports (% of imports)	2006
Electrical machinery and equipment	15.7%
Mineral fuels, mineral oils	15.3%
Machinery and mechanical appliances	11.2%
Vehicles other than railway or tramway	8.7%
Iron and steel	5.0%

Source: 2006

To see more products: More imports (Intracen Data)
More exports (Intracen Data)

Sources of economic information

Ministries: Ministry of Employment and the Economy Ministry of Agriculture and Forestry Ministry for Foreign Affairs
Statistical Office: Statistics Finland
Central Bank: Bank of Finland
Stock Exchange: OMX Helsinki Stock Exchange
Online newspapers: Helsingin Sanomat international edition
Helsinki Times
Finnish Broadcasting Company YLE: news in English
Kauppalehti online (in Finnish only)
Taloussanomat (in Finnish only)
Search Engines: Kolumbus
Sonera Plaza
Web Studio
www.fi
Economic portals: Finnguide

Political outline

Executive Power: President of Finland is the head of state, leads the foreign policy, and is the Commander-in-Chief of the Defense Forces. The main executive power lies in the cabinet appointed and headed by the prime minister. Before the constitutional rewrite, which was completed in 2000, the president enjoyed more power.
Legislative Power: Legislative power is vested in the Parliament of Finland (Eduskunta), and the government has limited rights to amend or extend legislation. The president has the power of veto over parliamentary decisions although it can be overrun by the parliament.
Main political parties: Finland has a multi-party system where a single party does not have chance to gain power alone; so parties work with each other to form coalition governments. The main political parties in the country are:
- Center Party (Suomen Keskusta) – a centrist political party, traditionally representing rural interests having strong political influence in small municipalities;
- National Coalition Party (Kansallinen Kokoomus) – a right-wing party draws its major support from business community and urban professionals;
- Social Democratic Party (Suomen Sosiaalidemokraattinen Puolue, SDP) – follows social-democratic ideology, draws its major support from country's working class;
- Greens (Vihreät) - advocates environmental interests;
- The Swedish People's Party (SFP) – a moderate liberal party of Swedish speaking minority.
Current political leaders: President: Tarja Halonen (since March 2000, re-elected in January 2006) –Social Democratic Party (SDP)
Prime Minister Matti Vanhanen (since June 2003) – Center Party, heading a coalition of Central Party and National Coalition Party
Next election dates: Presidential: January 2012
Parliamentary: March 2011