Finland - Economy

Economy

Main article: Economy of Finland See also: List of companies of Finland and Helsinki Stock Exchange

Finland has a highly industrialized mixed economy with a per capita output equal to that of other European economies such as France, Germany, Belgium or the UK. The largest sector of the economy is services at 66%, followed by manufacturing and refining at 31%. Primary production is 2.9%. With respect to foreign trade, the key economic sector is manufacturing. The largest industries are electronics (22%), machinery, vehicles and other engineered metal products (21.1%), forest industry (13%) and chemicals (11%).

Finland has timber and several mineral and freshwater resources. Forestry, paper factories, and the agricultural sector (on which taxpayers spend around 3 billion euros annually) are politically sensitive to rural residents. The Greater Helsinki area generates around a third of GDP. In a 2004 OECD comparison, high-technology manufacturing in Finland ranked second largest after Ireland. Knowledge-intensive services have also ranked the smallest and slow-growth sectors – especially agriculture and low-technology manufacturing – second largest after Ireland. Overall short-term outlook was good and GDP growth has been above many EU peers.

Finland is highly integrated in the global economy, and international trade is a third of GDP. The European Union makes 60% of the total trade. The largest trade flows are with Germany, Russia, Sweden, United Kingdom, United States, Netherlands and China. Trade policy is managed by the European Union, where Finland has traditionally been among the free trade supporters, except for agriculture. Finland is the only Nordic country to have joined the Eurozone.

Finland's climate and soils make growing crops a particular challenge. The country lies between latitudes 60°N and 70°N, and has severe winters and relatively short growing seasons that are sometimes interrupted by frosts. However, because the Gulf Stream and the North Atlantic Drift Current moderate the climate, Finland contains half of the world's arable land north of 60° north latitude. Annual precipitation is usually sufficient, but it occurs almost exclusively during the winter months, making summer droughts a constant threat. In response to the climate, farmers have relied on quick-ripening and frost-resistant varieties of crops, and they have cultivated south-facing slopes as well as richer bottomlands to ensure production even in years with summer frosts. Most farmland had originally been either forest or swamp, and the soil had usually required treatment with lime and years of cultivation to neutralize excess acid and to develop fertility. Irrigation was generally not necessary, but drainage systems were often needed to remove excess water. Finland's agriculture was efficient and productive—at least when compared with farming in other European countries.

Forests play a key role in the country's economy, making it one of the world's leading wood producers and providing raw materials at competitive prices for the crucial wood-processing industries. As in agriculture, the government has long played a leading role in forestry, regulating tree cutting, sponsoring technical improvements, and establishing long-term plans to ensure that the country's forests continue to supply the wood-processing industries. To maintain the country's comparative advantage in forest products, Finnish authorities moved to raise lumber output toward the country's ecological limits. In 1984 the government published the Forest 2000 plan, drawn up by the Ministry of Agriculture and Forestry. The plan aimed at increasing forest harvests by about 3% per year, while conserving forestland for recreation and other uses.

Private sector employees amount to 1.8 million, out of which around a third with tertiary education. The average cost of a private sector employee per hour was 25.1 euros in 2004. As of 2008 average purchasing power-adjusted income levels are similar to those of Italy, Sweden, Germany and France. In 2006, 62% of the workforce worked for enterprises with less than 250 employees and they accounted for 49% of total business turnover and had the strongest rate of growth. The female employment rate is high. Gender segregation between male-dominated professions and female-dominated professions is higher than in the US. The proportion of part-time workers was one of the lowest in OECD in 1999.

The employment rate was 68% and the unemployment rate was 6.8% in early 2008. 18% of residents are outside the job market at the age of 50 and less than a third are working at the age of 61. Unfunded pensions and other promises such as health insurances are a dominant future liability, though Finland is much better prepared than countries such as France or Germany. Directly held public debt has been reduced to around 32% of GDP in 2007. In 2007, the average household savings rate was −3.8 and household debt 101% of annual disposable income, a typical level in Europe. Home ownership rate is 60%.

As of 2006, 2.4 million households reside in Finland. The average size is 2.1 persons; 40% of households consist of a single person, 32% two persons and 28% three or more persons. Residential buildings total 1.2 million and the average residential space is 38 m2 per person. The average residential property without land costs 1,187 euro per sq metre and residential land 8.6 euro per sq metre. 74% of households had a car. There are 2.5 million cars and 0.4 million other vehicles.

Around 92% have a mobile phone and 83.5% (2009) Internet connection at home. The average total household consumption was 20,000 euro, out of which housing consisted of about 5500 euro, transport about 3000 euro, food and beverages excluding alcoholic beverages at around 2500 euro, and recreation and culture at around 2000 euro. According to Invest in Finland, private consumption grew by 3% in 2006 and consumer trends included durables, high quality products, and spending on well-being.