Articles on the economy
The significance of Finland’s service exports has grown rapidly. Service exports comprised about one third of the total value of exports in 2023. Finland’s service export destinations are dominated by a fairly small number of countries, the most important being the United States.
Finland’s export growth has fallen behind the growth in world trade. The reasons for this include not only the unfavourable structure of Finnish exports, but also the insufficient ability of Finnish companies to export products that stand out from the competition.
For households with outstanding loans, interest payments are now taking a larger slice of their income. Savings and a strong labour market have helped households cope with the rise in the cost of living.
Manufacturing industries, in particular, are suffering from supply chain problems and rising costs. The results of a business survey show that the majority of companies believe they can replace the lost volume of exports to Russia with new markets.
In an economic crisis there can be a risk of a credit slump in which loan losses weaken banks’ ability to extend credit. During the COVID-19 pandemic the risks of corporate lending have grown, but substantial loan losses have been avoided.
Most Finnish companies have suffered a drop in turnover as a result of the corona crisis. Service industries are hard pressed. Cost adjustments and funding arrangements have saved jobs.
Educational attainment among the Finnish working-age population is still high by international standards.
The pace of labour productivity growth in Finland has faded. This is attributable to lacklustre productivity development in manufacturing as well as the increasing dominance of services in the economy.
The economy has recovered from the recession following the financial crisis, but growth is expected to remain below its pre-crisis level, averaging 1.5% per annum over 2026–2040.
Education and labour market structures are important for decisions on and opportunities of employment particularly for young women and older workers.
Well-educated people typically earn more than those with a lower level of education. Education also improves earnings by enhancing a person’s employment prospects.
The global market share of Finnish exports has been declining continuously ever since the financial crisis. To what extent is the decline in market share explained by the structure of goods exports?
Industrial profitability has been linked to fluctuations in export demand, but over the long term it has also followed relative wage developments. The chemical industry has emerged as the most profitable. Most sectors within the metal industry have shown weakened profitability.
While the income uncertainty of Finnish households has not seen any major changes, there are big differences between age-groups and occupations.
Before the current recession, Finland was closing the gap on Europe’s wealthiest small economies but is now falling ever further behind.
The ageing households spend less of any additional income on consumption than the young. Population ageing may weaken the impact of interest rate changes on the economy.
The longer working careers and higher earnings of those now retiring have caused a rising trend in earnings-related pensions. As this has been accompanied by a strong increase in unemployment expenditure and slow growth in aggregate income, a growing number of households now depend on current transfers.
The financial crisis has increased our understanding of cross-border stability threats. Overheating on the international financial markets would push up asset prices and possibly also increase the supply of loans.