Economy
Finnish exports to Russia, which used to be a sizeable source of revenue,” says Kyriakopoulou. Christophe Andre, senior economist at OECD, says the decline in manufacturing of wood and paper started around the turn of the century and has cut GDP by around 0.75% since 2007. The value of goods exported to Russia has fallen by roughly half over the past three years, subtracting about 1.5% from the GDP. Apart from these external factors, there are some internals ones that contribute to the dismal view of the economy. Finland has grown highly
uncompetitive when it comes to wages as it allowed fast increase in wages after adoption of the euro. In the post-2010 period, wages grew significantly faster in Finland than in other Eurozone economies. According to estimates by Statistics Finland, GDP (adjusted for working days) was 0.3% lower in the fourth quarter of 2015 than a year earlier. GDP has been broadly flat since mid-2012 and is about 7% below its late-2007 peak. Kyriakopoulou says, “We project growth at around 1% in 2016. However, there are downside risks to this projection, notably related to the international
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environment on which a small open economy like Finland is highly dependent.” Some opine that Finland’s situation would have been better had it retained its currency. But Zilinsky would like to differ. “It is not likely that a country like Finland would dramatically devalue its own currency to gain a competitive advantage over its trading partners,” he explains. “Although a comparison cannot be made between Finland and other European countries, Denmark which did not adopt the euro is not performing significantly better. Neither has the UK managed to use its
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Although the country has been performing poorly in recent years, it has many structural strengths, like a highskilled workforce and a well-functioning financial system. This should allow growth to restart at some point Christophe Andre, senior economist at OECD
International Finance Magazine Jul - Sep 2016