Economy of Finland

The main articles are:

• Finland
• World economy

GDP

2023

1% reduction in GDP

At the end of 2023, Finland's GDP fell by about 1%. For comparison, a year earlier, an increase of 1.3% was recorded, and in 2021 the increase was 2.8%. Such data in mid-March 2024 was published by the country's Statistics Office.

It is noted that GDP per capita of Finland fell below the level of the financial crisis in 2008. The deficit of the public administration sector in 2023 grew to more than €7 billion. A year earlier, the deficit was estimated at €1.4 billion. The growth of the indicator was influenced by a decrease in value added tax charges, wage growth and other factors.

Despite the weak economy, employment remained at a fairly high level - about 73%. Unemployment began to rise, however, and job vacancies fell by half from the peak seen in late 2022.

In particular, the weak indicators of the housing construction sector have a negative impact on the Finnish economy. Previously, almost half of the new buildings in the greater Helsinki area were bought for rent. But real estate investors lost interest in this area, as interest rates rose against the background of the emerging macroeconomic situation and geopolitical tensions, and the number of vacancies increased. At the same time, the rent practically did not rise. Housing construction is falling at the same rate as it did during the 1990s recession.

Net exports of services in Finland, as noted, in 2023 decreased compared to the previous year. The fall is due to the slowing development of the telecommunications sector, as well as computer and information services. Overall, high inflation and rising interest rates are weighing on economic activity and demand.^[1]

Industry's share of GDP

GDP contraction of 0.9% in Q3

In the third quarter of 2023, the Finnish economy contracted the most since the beginning of the Covid-19 pandemic, as falling demand for exported goods, as well as rising borrowing costs, put pressure on the economies of the Scandinavian countries. GDP shrank 0.9% from the previous quarter.

2022

Industry's share of GDP is less than 20%

GDP size forecast - $0.29 trillion

2021

GDP size - $0.3 trillion

Agriculture's share of GDP - 2.3%

Financial system

Key rate

Non-financial debt

2022: Aggregate non-financial debt 250% of GDP

National debt

2023: State debt - 75% of GDP or 210 billion euros

In 2023, the ratio of Finland's public debt to GDP increased by 2.3% and amounted to 75.8% at the end of the year. In general, for the EU countries, the ratio of public debt to GDP, on the contrary, decreased by 1.7% over the year to 81.7%.

In Finland, the ratio of public debt to GDP is the ninth largest among EU member states. In neighboring Sweden, the ratio of public debt to GDP at the end of the year was only 31.2%.

According to Eurostat, Finland's public debt increased to €210.5 billion by the end of 2023.

2017: State debt - 61% of GDP

Inflation

2022

Inflation in November - 8.3%

Inflation growth in September to 8.1%

In September 2022, inflation in Finland rose to 8.1% amid another round of growth in electricity and fuel prices.

Inflation in July - 7.8%

Investments

2023: Reduced foreign investment

Minerals

2022: Second place in the world in cobalt processing

Company bankruptcies

2023: Rise in bankruptcies to record 26 years after severing economic ties with Russia

The number of companies filing for bankruptcy in Finland in July 2023 increased to the maximum level over the past 26 years (224 companies were insolvent), which is a direct result of failed attempts to put pressure on Russia and break economic ties with it. According to statistics, the construction industry and other service enterprises account for the most bankrupt.

Labour market and unemployment

Main article: Labour market in Finland

Foreign trade

2022

Germany is the largest export destination

Trade deficit with China

Drop in direct supplies to Russia by 85% in January during the rise of exports to neighboring CIS countries by 270%

The export of Finnish goods to Russia in January amounted to 46.5 million euros, which is 85% less than a year earlier, while exports to Armenia, Kazakhstan, Uzbekistan and Kyrgyzstan increased by 270%, to 41.8 million, the statistics of Finnish customs.

Finnish companies lost €4 billion due to leaving Russia

The total losses of Finnish companies, whose shares are traded on the stock exchange in Helsinki, due to the reduction or closure of business in the Russian Federation against the background of the Russian special operation in Ukraine in 2022 amounted to about 4 billion euros. Among them are Fortum, YIT, Nokian Tyres and Finnair. Such data in early March 2023 cited the newspaper Helsingin Sanomat.

The biggest losses were suffered by the Finnish energy state company Fortum, which invested about €5 billion in cooperation with Russia. The company's losses are estimated at €1.7 billion, the company cannot sell its Russian assets. The company has become the only one in Finland whose losses are estimated at billions of euros.

Large losses from leaving the Russia publication also counted from the construction company (YIT €440 million) and tire manufacturer Nokian Tyres (€300 million). For many years, the plant in Russia and the cheap rate ruble have been competitive advantages for Nokian Tyres. Most of the tires for passenger cars were produced in Russia, the publication says. The basis of the profit of Nokian Tyres was the export of Russian-made tires to Western countries.

The main Finnish air carrier Finnair was also significantly affected by the imposition of sanctions against Russia. The airline, which has just begun to recover from the pandemic, suffered losses of €150 million in 2022. In addition, Finnair's activities are seriously affected by Russia's closure of airspace for its aircraft, which has complicated flights in the critical Asian direction for the company.

Several other large Finnish companies, including Kone, Nokia and Nordea, also reported large write-offs worth millions of euros in 2022 due to Russian business, Helsingin Sanomat reports.^[2]

Deliveries to Russia through neighboring countries

Finland by the end of 2022 increased the volume of supplies to neighboring countries with Russia to €30 million per month. Their share (Armenia, Georgia, Kazakhstan and Kyrgyzstan) accounts for almost the entire growth in exports of Finnish companies. For example, Helsinki's supply to Kyrgyzstan increased by 800% in 2022. Analysts argue that most of the goods sold fall under the restrictive measures of Western countries.

The number of Finnish companies continuing to work with Russia has decreased by 85% to less than 100

The number of Finnish companies continuing to work with Russia decreased by 85% in 2022 and is less than 100 - Finland's customs. Sanctions against Russia have led to the fact that Finnish trade is almost completely - by 95% - carried out by sea.

Reduction in exports to Russia for 8 months by 29% to 1.55 billion euros

According to Finnish customs, against the background of EU sanctions due to the conflict in Ukraine, in August 2022, exports of goods to Russia collapsed by 70% compared to the same month last year, to 81.7 million euros. For 8 months, exports to the Russian Federation decreased by 29.5% to 1.55 billion euros. In the structure of exports to Russia in minus, almost all categories of goods failed - especially pulp, paper, cardboard and products from them, the export of which fell by 99% in August. The only position in which exports to Russia increased, and by 50% year-on-year, was copper matte.

2019: Computer Device Exports

Energy carriers

2022

Reduce gas consumption by nearly 60%

Gas consumption in the bloc from August 2022 to January 2023 was 19% below the average for the previous five years, according to data released by Eurostat. The largest drop occurred in Finland - consumption more than halved.

Rejection of pipeline gas from Russia and transition to LNG, mainly from Russia

In May 2022, Finland refused to switch to paying for gas from Russia in rubles and supplies through the pipeline were stopped. See Gasum for details.

Finland, having abandoned Russian pipeline gas, buys LNG from the Cryogas-Vysotsk plant, its load does not subside, Novatek reported in June 2022.

As the Russian trade representative in Finland noted, "for the period from January to September 2022, Finland imported LNG in the amount of 85 million euros, of which 75 million euros (88%) are of Russian origin."

The limited capacity of Finnish terminals, as well as high demand and record LNG prices in Europe, prevent Finns from refusing to import Russian energy resources.

2020: High dependence on gas from Russia

Power

Main article: Power of Finland

NPP

• Loviisa NPP is the 1st nuclear power plant in Finland, which by 2022 provides more than 10% of electricity in the country.

• Olkiluoto NPP

Automotive market

2021:93 thousand cars produced

Consumption

2023: Fish consumption is higher than meat consumption

2019

Pork is the most consumed type of meat

Beer consumption in liters per year per person

2018

Per capita tea consumption per kg per year

Milk consumption in liters per year per person

Agriculture

2021: Share of farmland - 7%

2019: Low use of pesticides in agriculture

Tourism

2023: In Finland, a shopping complex built for €35 million is sold for $70 thousand due to the outflow of tourists from Russia

The Zsar Outlet Village shopping complex, located in Finland near the border by Russia, was sold for 70 thousand euros, although 35 million euros were invested in its construction. The results of the auction became known at the end of November 2023. Read more here.

2019: More than 45% of the population went on tourist trips. Spain is the most popular country

2018: Tourism revenue

Alcohol market

Minimum age to purchase alcoholic beverages

R&D

2020: R&D spending - $7.2 billion

Food industry

2021: Cheese production - 15.1 kg per capita