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flag Finland Finland: Economic and Political Outline

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

Often used as an example for its economic performances and its competitiveness and innovative successes, Finland is one of the countries in the euro zone which has been hit the hardest by the global financial crisis and the crisis in the eurozone. After shrinking for the second year in a row in 2013 (-0.6%), the Finnish economy should finally see a recovery in 2014 (0.8%).

The global financial crisis and the stimulus measures had a profound and durable impact on public finances and debt levels, with the latter possibly doubling over the course of a decade. The main obstacle which the government now must deal with is therefore to combine measures to promote growth and measures allowing for the rebalancing of accounts. In 2013, both the volume of trade and consumption dropped due to austerity measures. The coalition government's 2014 budget focuses on the reduction of poverty, social inequality and social exclusion, on the consolidation of public finances, supporting and developing sustainable economy, employment and competitiveness. The government is relying on exports to stimulate the economic recovery. The issues which the country has to deal with includre the energy question, houshold debt, environmental protection, education, research, enterpreneurship and population aging. Finland is among the countries who are most affected by population aging and a fall in the active workforce.

Its GDP being among the highest in the world, Finland offers a high living standard. The distribution of wealth is fair, however, social inequalities have risen in the recent years. Affected by the crisis, the unemployment rate has also increased considerably, and should remain at around 8% in 2014.

 
Main Indicators 20112012201320142015 (e)
GDP (billions USD) 273.93255.92267.41e276.27280.67
GDP (Constant Prices, Annual % Change) 2.6-1.5-1.2e-0.20.9
GDP per Capita (USD) 50,71547,15949e50,45151,020
General Government Balance (in % of GDP) -0.9-1.1-0.2-0.10.3
General Government Gross Debt (in % of GDP) 47.351.854.757.9e59.3
Inflation Rate (%) 3.33.22.21.2e1.5
Unemployment Rate (% of the Labor Force) 7.87.78.28.58.3
Current Account (billions USD) -1.69-3.12-2.47-1.58e-1.31
Current Account (in % of GDP) -0.6-1.2-0.9-0.6-0.5

Source: IMF - World Economic Outlook Database , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

Agriculture represents less than 3% of the current Finnish GDP and employs less than 4.5% of the population. Because of the unfavorable climate, agricultural development is limited to the maintenance of a certain level of self-sufficiency in basic products. Cereal production dominates, well ahead of milk production and animal husbandry.

Finland's accession to the EU has further accelerated the process of restructuring and downsizing of this sector.

Forestry is traditionally well-developed: Finland exports a rich variety of products ranging from simple wooden products to high-tech tags and labels and including paper, cardboard, packaging etc. Other key industrial sectors are metal production, mechanical engineering and electronic goods. Finland specializes in exporting information and communication technologies, Nokia becoming the world leading manufacturer of mobile handsets.

The service sector employs almost 70% of the population and accounts for almost 68% of the GDP.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 4.1 22.7 72.7
Value Added (in % of GDP) 2.7 26.9 70.5
Value Added (Annual % Change) 0.2 -2.1 -1.1

Source: World Bank - Last Available Data.

 
 
 
Monetary Indicators 20092010201120122013
Euro (EUR) - Average Annual Exchange Rate For 1 USD 0.720.760.720.780.76

Source: CIA - The world factbook - Last Available Data.

 
 

Learn more about Market Analyses about Finland on Globaltrade.net, the Directory for International Trade Service Providers.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
73.4/100
Position:
Mostly Free
World Rank:
19/178
Regional Rank:
9/43

Distribution of Economic freedom in the world
Source: 2014 Index of Economic freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
8.18
World Rank:
9/82

Source: The Economist - Business Environment Rankings 2014-2018

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Finland is a highly industrialized country, whose economy relies heavily on exports (40% of the GNP) and whose trade accounts for roughly 80% of the GDP (WTO 2010-2012 average).

The country's trade balance had been structurally positive, yet in the recent years it contracted, finally creating a record trade deficit in 2011 because imports had reached their pre-crisis levels while exports were growing more slowly. In 2013, both exports and imports fell and the trade deficit slightly diminished (2.2 billion euro). A progressive resumption of exports is expected given the restructuring of export industries and the resumption of imports in Finland's European neighbors. 

The country's main trading partners are Germany, Russia, Sweden, China and the United States.

 
Foreign Trade Indicators 20092010201120122013
Imports of Goods (million USD) 60,89068,80384,26476,46877,249
Exports of Goods (million USD) 62,85569,51879,14273,01274,154
Imports of Services (million USD) 25,63626,59328,88230,14228,606
Exports of Services (million USD) 27,48226,88528,95128,10029,878
Imports of Goods and Services (Annual % Change) -16.96.56.01.3-2.5
Exports of Goods and Services (Annual % Change) -20.16.22.01.2-1.7
Imports of Goods and Services (in % of GDP) 34.337.440.041.139.1
Exports of Goods and Services (in % of GDP) 36.338.739.239.638.2
Trade Balance (million USD) 12,73010,3903,4913,5974,799
Trade Balance (Including Service) (million USD) 7,1416,026730-1,0391,030
Foreign Trade (in % of GDP) 70.576.179.280.777.3

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2013
Sweden 11.5%
Russia 9.4%
Germany 9.3%
United States 6.1%
Netherlands 6.0%
See More Countries 57.8%
Main Suppliers
(% of Imports)
2013
Russia 18.0%
Germany 12.3%
Sweden 11.3%
China 6.3%
Netherlands 4.7%
See More Countries 47.5%

Source: Comtrade, Last Available Data

 
 

Main Products

- bn USD of products exported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 11.9%
Paper and paperboard, coated on one or both sides...Paper and paperboard, coated on one or both sides with kaolin china clay or other inorganic substances, whith or without a binder, and with no other coating, whether or not surface-coloured, surface-decorated or printed, in rolls or in square or rectangular sheets, of any size (excl. all other coated papers and paperboards) 7.0%
Flat-rolled products of stainless steel, of a...Flat-rolled products of stainless steel, of a width of >= 600 mm, hot-rolled or cold-rolled cold-reduced 3.6%
Wood sawn or chipped lengthwise, sliced or barked,...Wood sawn or chipped lengthwise, sliced or barked, whether or not planed, sanded or end-jointed, of a thickness of > 6 mm 2.5%
Chemical wood pulp, soda or sulphate (excl....Chemical wood pulp, soda or sulphate (excl. dissolving grades) 2.5%
See More Products 72.5%
- bn USD of products imported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 12.0%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 6.6%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 3.3%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 2.4%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 2.0%
See More Products 73.6%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 
 
 

Main Services

- bn USD of services exported in 2011
31.88%
22.36%
12.76%
11.79%
10.78%
6.51%
2.29%
1.23%
0.39%
- bn USD of services imported in 2011
38.70%
23.54%
16.61%
7.27%
4.62%
4.60%
1.84%
1.57%
1.24%

Source: Comtrade, Last Available Data

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Sources of General Economic Information

Ministries
Ministry of Employment and the Economy
Ministry of Agriculture and Forestry
Ministry for Foreign Affairs
Ministry of justice
Statistical Office
Statistics Finland
Central Bank
Bank of Finland
Stock Exchange
OMX Helsinki Stock Exchange
Search Engines
Kolumbus
Sonera Plaza
Web Studio
http://www.fi
Economic Portals
Finnguide

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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) (in Finnish) – a moderate liberal party of Swedish speaking minority.
Current Political Leaders
President: Sauli NIINISTO (since 1 March 2012) – National Coalition Party
Prime Minister: Jyrki KATAINEN (since 22 June 2011) - National Coalition Party (Kansallinen Kokoomus)
Next Election Dates
Presidential: February 2018
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
1/180
Evolution:
same place compared to 2013

Source: Worldwide Press Freedom Index 2014, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Map of freedom 2014
Source: Freedom House

 

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Last Updates: February 2015