Business Environment in Finland
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 crisis, due to a collapse of exports. After shrinking by 8% In 2009, the economy rebounded in 2010, with an estimated growth of 2.4%. The recovery was driven by the processing industry and semi-furnished goods stimulated by both foreign and domestic demand. It is expected that the economy will not return to its pre-recession growth rate before the end of 2012.
The crisis and stimulus measures had a profound and durable impact on public finances and debt levels. 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 the more long-term perspective, the aging population is also a source of future pressure on spending. Structural reforms focused on increasing productivity and employment offer are therefore necessary.
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, reaching around 9% today.
|GDP (billions USD)||238.44||239.23e||260.38||271.48e||280.96|
|GDP (Constant Prices, Annual % Change)||-8.2||3.1e||3.1e||2.5||2.2|
|GDP per Capita (USD)||44,556e||44,489||48,188||49,999e||51,498|
|General Government Balance (in % of GDP)||0.8||0.2||0.7||0.1||-0.8|
|Inflation Rate (%)||1.6||1.7e||3.0||2.1||2.0|
|Unemployment Rate (% of the Labor Force)||8.3||8.4||8.0e||7.8e||7.7e|
|Current Account (billions USD)||3.30e||4.85||4.51||4.49||-|
|Current Account (in % of GDP)||1.4e||2.0||1.8e||1.8e||-|
Source: IMF - World Economic Outlook Database
Note: (e) Estimated Data
Main Sectors of Industry
Agriculture represents less than 3% of the current Finnish GNP and employes less than 5% of the population. Because of the unfavorable climate, agricultural development is limited to the maintainace 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 randing 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 65% of the GDP.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||4.5||25.4||69.5|
|Value Added (in % of GDP)||2.7||28.2||69.2|
|Value Added (Annual % Change)||-0.6||-16.3||-3.5|
Source: World Bank - Last Available Data.
|Euro (EUR) - Average Annual Exchange Rate For 1 USD||0.80||0.80||0.73||0.68||0.72|
Source: World Bank
Indicator of Economic Freedom
- Mostly free
- World Rank:
- Regional Rank:
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 85% of the GDP.
As an effect of the global economic crisis, the country experienced an unprecedented fall in foreign trade, exports decreasing by 32% and imports by 31%. The recovery in 2010 has been slow. The country's trade balance is structurally positive and remains positive in spite of a deterioration due to the crisis; this trend should continue in 2011.
The country's main trading partners are Germany, Russia, Sweden, China and the United States.
|Foreign Trade Indicators||2006||2007||2008||2009||2010|
|Imports of Goods (million USD)||69,375||81,704||91,781||60,890||68,095|
|Exports of Goods (million USD)||77,206||90,025||96,456||62,855||69,264|
|Imports of Services (million USD)||18,571||22,613||30,377||25,636||22,864|
|Exports of Services (million USD)||17,388||23,167||31,772||27,482||24,750|
|Imports of Goods and Services (Annual % Change)||7.9||7.0||6.5||-18.1||-|
|Exports of Goods and Services (Annual % Change)||11.8||4.8||-||-||-|
|Imports of Goods and Services (in % of GDP)||40.8||40.7||43.0||34.9||-|
|Exports of Goods and Services (in % of GDP)||45.5||45.8||47.0||37.4||-|
|Trade Balance (million USD)||11,505||12,503||10,210||4,790||-|
|Trade Balance (Including Service) (million USD)||10,385||13,021||11,383||-||-|
|Foreign Trade (in % of GDP)||86.3||86.6||89.9||72.3||-|
Source: WTO - World Trade Organization ; World Bank
Main Partner Countries
(% of Exports)
|Other partnersClose extended list||55.8%|
(% of Imports)
|Other partnersClose extended list||46.0%|
Sources of General Economic Information
Ministry of Employment and the Economy
Ministry of Agriculture and Forestry
Ministry for Foreign Affairs
- Statistical Office
- Central Bank
Bank of Finland
- Stock Exchange
OMX Helsinki Stock Exchange
- Search Engines
- Economic Portals
- 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: Tarja Halonen (since March 2000, re-elected in January 2006) –Social Democratic Party (SDP)
Prime Minister: Mari KIVINIEMI (since 22 June 2010) - Centre Party (Kesk)
- Next Election Dates
- Presidential: January 2012
Parliamentary: March 2011
Indicator of Freedom of the Press
- World Rank:
- 3 place up compared to 2008
Indicator of Political Freedom
- Political Freedom:
- Civil Liberties:
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