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Finland Economy 1996

    • Overview:
      Finland has a highly industrialized, largely free market economy, with per capita output two-thirds of the US figure. Its key economic sector is manufacturing - principally the wood, metals, and engineering industries. Trade is important, with the export of goods representing about 30% of GDP. Except for timber and several minerals, Finland depends on imports of raw materials, energy, and some components for manufactured goods. Because of the climate, agricultural development is limited to maintaining self-sufficiency in basic products. Forestry, an important export earner, provides a secondary occupation for the rural population. The economy, which experienced an average of 4.9% annual growth between 1987 and 1989, sank into deep recession in 1991 as GDP contracted by 6.5%. The recession - which continued in 1992 with GDP contracting by 4.1% - has been caused by economic overheating, depressed foreign markets, and the dismantling of the barter system between Finland and the former Soviet Union under which Soviet oil and gas had been exchanged for Finnish manufactured goods. The Finnish Government has proposed efforts to increase industrial competitiveness and efficiency by an increase in exports to Western markets, cuts in public expenditures, partial privatization of state enterprises, and changes in monetary policy. In June 1991 Helsinki had tied the markka to the European Union's (EU) European Currency Unit (ECU) to promote stability. Ongoing speculation resulting from a lack of confidence in the government's policies forced Helsinki to devalue the markka by about 12% in November 1991 and to indefinitely break the link in September 1992. The devaluations have boosted the competitiveness of Finnish exports. The recession bottomed out in 1993, and Finland participated in the general European upturn of 1994. Unemployment probably will remain a serious problem during the next few years; the majority of Finnish firms face a weak domestic market and the troubled German and Swedish export markets. The Finns voted in an October 1994 referendum to enter the EU, and Finland officially joined the Union on 1 January 1995. Increasing integration with Western Europe will dominate the economic picture over the next few years.

    • National product:
      GDP - purchasing power parity - $81.8 billion (1994 est.)

    • National product real growth rate:
      3.5% (1994 est.)

    • National product per capita:
      $16,140 (1994 est.)

    • Inflation rate (consumer prices):
      2.1% (1992)

    • Unemployment rate:
      22% (1993)

    • Budget:

        $21.7 billion

        $31.7 billion, including capital expenditures of $NA (1993 est.)

    • Exports:
      $23.4 billion (f.o.b., 1993)

        paper and pulp, machinery, chemicals, metals, timber

        EC 53.2% (Germany 15.6%, UK 10.7%), EFTA 19.5% (Sweden 12.8%), US 5.9%, Japan 1.3%, Russia 2.8% (1992)

    • Imports:
      $18 billion (c.i.f., 1993)

        foodstuffs, petroleum and petroleum products, chemicals, transport equipment, iron and steel, machinery, textile yarn and fabrics, fodder grains

        EC 47.2% (Germany 16.9%, UK 8.7%), EFTA 19.0% (Sweden 11.7%), US 6.1%, Japan 5.5%, Russia 7.1% (1992)

    • External debt:
      $30 billion (December 1993)

    • Industrial production:
      growth rate 5% (1993 est.); accounts for 28% of GDP

    • Electricity:

        13,360,000 kW

        58 billion kWh

        consumption per capita:
        12,196 kWh (1993)

    • Industries:
      metal products, shipbuilding, forestry and wood processing (pulp, paper), copper refining, foodstuffs, chemicals, textiles, clothing

    • Agriculture:
      accounts for 7% of GDP (including forestry); livestock production, especially dairy cattle, predominates; main crops - cereals, sugar beets, potatoes; 85% self-sufficient, but short of foodgrains and fodder grains; annual fish catch about 160,000 metric tons

    • Illicit drugs:
      transshipment point for Latin American cocaine for the West European market

    • Economic aid:

        ODA and OOF commitments (1970-89), $2.7 billion

    • Currency:
      1 markka (FMk) or Finmark = 100 pennia

    • Exchange rates:
      markkaa (FMk) per US$1 - 4.7358 (January 1995), 5.2235 (1994), 5.7123 (1993), 4.4794 (1992), 4.0440 (1991), 3.8235 (1990)

    • Fiscal year:
      calendar year

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