ECONOMY
Finland has a highly industrialized, free-market economy with a per capita output equal to that of other western economies such as France, Germany, Sweden, or the U.K. The largest sector of the economy is services (64.6%), followed by manufacturing and refining (32.3%). Primary production is at 3.2%.
The Finnish economy has made enormous strides since the severe recession of the early 1990s. Finland successfully joined the euro zone and has outperformed euro-area partners in terms of economic growth and public finance. In the last few years, the Finnish economy has performed reasonably well, and Finland is now into its third year of upswing. The upswing is, however, set to level off in 2008 and GDP growth is estimated to slow from 4.4% in 2007 to 2.8% in 2008. Unemployment decreased significantly from 1994 to 6.9% in 2007 and is expected to drop to 6.2% in 2008. A relatively inflexible labor market and high employer-paid social security taxes hamper growth in employment. Labor bottlenecks are becoming more common in certain sectors, and this will increasingly restrict growth in output in the future. The main constraint to medium-term economic growth will be the drop in the population of working age once the post-war baby boomers reach retirement age.
Exports of goods and services contribute 32% of Finland's GDP. Metals and engineering (including electronics) and timber (including pulp and paper) are Finland's main industries. The United States is Finland's third most important trading partner outside of Europe. With a 3.4% share of imports in 2007, the United States was Finland's ninth-largest supplier. The total value of U.S. exports to Finland in 2007 was $2.7 billion. Major exports from the United States to Finland continue to be machinery, telecommunications equipment and parts, metalliferous ores, road vehicles and transport equipment, computers, peripherals and software, electronic components, chemicals, medical equipment, and some agricultural products. The primary competition for American companies comes from Russia, Germany, Sweden, and China. The main export items from Finland to the United States are electronics, machinery, ships and boats, paper and paperboard, refined petroleum products, telecommunications equipment and parts. In 2007, the United States was Finland's fourth-largest customer after Germany (10.9%), Sweden (10.7%), and Russia (10.2%), with an export share of 6.4%, or $5.7 billion. However, trade is only part of the totality: the 10 biggest Finnish companies in the United States have a combined turnover that is three times the value of Finland's total exports to the United States. About 2.3% of the Finnish GDP comes from exports to the United States.
Except for timber and several minerals, Finland depends on imported raw materials, energy, and some components for its manufactured products. Farms tend to be small, but farmers own sizable timber stands that are harvested for supplementary income in winter. The country's main agricultural products are dairy, meat, and grains. Finland's EU accession has accelerated the process of restructuring and downsizing of this sector.
Economy (2007)
GDP: $245.3 billion (EUR 179 billion).
GDP growth rate: 4.4%.
Per capita income: $46,327 (EUR 33,803).
Inflation rate: 2.5% (2007 average); 3.9% (March 2008).
Natural resources: Forests, minerals (copper, zinc, iron), farmland.
Agriculture, forestry, fishing and hunting (2.9% of GDP): Products--meat (pork and beef), grain (wheat, rye, barley, oats), dairy products, potatoes, rapeseed.
Industry (30.1% of GDP): Types--metal (including electronics and electrical equipment) and engineering, forest products, chemicals, shipbuilding, foodstuffs, textiles.
Trade: Exports--$89.7 billion. Major markets--EU 57%, Russia 10.2%, U.S. 6.4%, China 3.3%. Imports--$81.5 billion. Major suppliers--EU 56%, Russia 14.1%, China 7.5%, U.S. 3.4%.
