In addition to the forest, Finland has few
natural resources. Despite this, the country has
achieved a high standard of living. In addition to the
forest industry, the most important industries also
include the production of electronics as well as metal
and workshop products. In recent years, the service
sector has become increasingly important and now employs
close to three-quarters of the labor force.
The Finnish market is relatively small and the
country is dependent on extensive trade, especially in
Sweden, Germany, the US and China. Traditionally, Russia
is also an important trading partner, but since 2014 EU
sanctions against Russia and Russian import bans on
certain goods from EU countries have led to a sharp
reduction in trade between Finland and Russia (see also
Major imports by Finland, covering a full list of top products imported by the country and trade value for each product category.
In recent decades, Finland has been a typical mixed
economy. Most companies are privately owned, but some
businesses have a largely monopoly on the state, such as
rail traffic and alcohol sales. The state is also part
owner of some large companies such as Finnair and the
industrial group Metso. In recent years, the economy has
been partially liberalized, including mail and
telecommunications now being managed by private
companies. In order to increase profitability, many
Finnish companies have chosen to move production of
goods to low-wage countries.
The deep international recession in the early 1990s
hit Finland hard. In three years, unemployment rose from
just over 3 percent to 18 percent. From 1991 to 1992,
gross domestic product (GDP) fell by 6 percent. One
reason why Finland was hit so hard was that exports to
the east declined sharply in connection with the
dissolution of the Soviet Union in 1991. A large number
of companies were closed down and many households found
it difficult to manage.
Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including FIN which represents the country of Finland.
Finland joins the euro
At the end of 1993, the Finnish economy began to
recover. New export markets emerged and the previously
so strong dependence on the forest industry declined to
some extent. Particularly important were the electronics
and IT sectors. Low inflation and falling interest rates
led to an increase in consumption as Finns got more
money to move. As a result of Finland's entry into the
EU in 1995, food prices in the country fell.
In order to stabilize its currency, Finland joined
the EU's currency cooperation EMU in 1998. In January
2002, the Finnish soil was replaced by the euro. In
1994–2008, the country's economy grew by an average of
3-4 percent per year, which was above the euro area
One weakness of the Finnish economy was that such a
large part of the growth was long based on the success
of a single company: the telecommunications company
Nokia, which in the early 2000s accounted for up to 4
percent of the country's GDP and over 20 percent of
From the autumn of 2008, several western countries,
not least in the euro zone, were drawn into a global
financial crisis that caused the economic downturn and
which also exposed major economic problems in several of
the euro area countries. In 2009, Finland's GDP fell by
over 8 percent, mainly due to a decline in exports. In
2010, a certain recovery began and the economy grew
somewhat. One reason for this was that the Finnish major
banks performed relatively well because they had been
more cautious about lending money than many other
The growth was also due to the fact that exports
regained momentum from 2010. But there were major
differences between different industries. The chemical
industry did well during the crisis, while shipbuilding
and heavy vehicle manufacturers, for example, lost many
customers. Unemployment remained relatively high.
At the end of the first decade of the 21st century,
it became clear that Nokia had difficulty asserting
itself in competition with other telecom companies. In
2012, the company was forced to lay off thousands of
employees in both Finland and other countries, while
parts of production would be relocated to Asia. From
2008 to early 2012, the company's share lost 90 percent
of its value.
The recession also hit the state finances. In 2009,
the budget deficit rose, approaching the 3 percent of
GDP set by the euro area countries. The government
announced several savings programs, including cuts in
health care and school, higher VAT and tax increases on
electricity, newspapers and tobacco.
Finland's national debt increased from just over one
third of GDP in 2007 to about half of GDP in 2011, which
was nevertheless a low figure in international
comparison. Households' debt grew throughout the decade.
Competition in the telecommunications market became
increasingly fierce, and Nokia's losses increased. In
September 2013, the company announced that it had
decided to sell its mobile phone unit to US Microsoft.
It was a psychological blow to the view of the Finnish
economy, but in numbers, Nokia no longer contributed to
GDP but was instead a brake on growth.
From 2014, Finland's economy was also adversely
affected by the EU's rapidly deteriorating relations
with Russia, a consequence of the Ukraine crisis.
Finland's commodity exports to neighboring countries in
the east declined sharply as the EU imposed trade
sanctions on the Russians, which in turn banned imports
of certain goods from the EU. Other causes of the
economic downturn in Finland were increased costs for
the public sector as the population on average has grown
Relatively large wage increases in 2008–2009 have
contributed to the international competitiveness of
Finnish companies. Wage increases have also resulted in
inflation since 2008 averaging higher than the average
in the euro zone.
As a consequence of the country's economy having
shrunk three years in a row (2012–2014), in the autumn
of 2015, the government introduced a series of
restrictions in the working conditions of public
employees. The number of holiday days decreased from 38
to 30. The overtime allowance was halved and the
compensation for work on Sundays was reduced from 100 to
75 percent. A sick leave on sick leave was also
introduced. The government's goal was to reduce the
state's labor costs in the public sector by 5 percent.
In 2015, GDP growth fell to a modest 0.4 percent,
while Finnish government debt climbed to 63 percent of
GDP from 59 percent in 2014. Thus, for the first time,
the government debt exceeded the eurozone's ceiling of
60 percent of GDP.
FACTS - FINANCE
GDP per person
US $ 49,648 (2018)
US $ 273,961 M (2018)
1.7 percent (2018)
Agriculture's share of GDP
2.5 percent (2018)
Manufacturing industry's share of GDP
15.3 percent (2018)
The service sector's share of GDP
59.2 percent (2018)
1.2 percent (2019)
Government debt's share of GDP
59.3 percent (2018)
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