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World > Europe > Finland > Economy (Notes)

Finland - Economy (Notes)


ECONOMY
Finland has an industrial economy based on abundant forest resources, capital investments, and high technology. Traditionally, Finland has been a net importer of capital to finance industrial growth; in recent years it has become a net exporter of capital. Finland has one of the best-performing economies in the EU and Europe.

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. Total output 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%. 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 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 soaring house prices and higher interest rates.

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 3.8% share of imports in 2006, the United States was Finland's seventh-largest supplier. The total value of U.S. exports to Finland in 2006 was $2.6 billion. Major exports from the United States to Finland continue to be machinery, telecommunications equipment and parts, aircraft and aircraft parts, 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 2006, the United States was Finland's fourth-largest customer after Germany (11.3%), Sweden (10.5%), and Russia (10.1%), with an export share of 6.5%, or $5 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.


Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions - Euro Exchange Rates
Notes and Commentary: Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions
Euro Exchange Rates


Notes and Commentary
Economy
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.





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