Finland flag Finland: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Despite being vulnerable to the international conjuncture, Finland is often cited as a model example for its economic performance, competitiveness and innovative success. After experiencing only a mild contraction in 2020, economic activity had already reached the pre-crisis level in mid-2021. According to IMF estimates, GDP grew by 3% in 2021, underpinned by public and private consumption. The latter should increase further this year, as consumers readjust their consumption patterns and employment and wages grow; resulting in an expected growth of 3%, followed by 1.5% in 2023 as the economic cycle is projected to normalise towards the long-term potential GDP growth rate (IMF forecast).

The position of public finances had improved in recent years; however, the pandemic caused a fall in government revenues and a rise in expenditures (with temporary health-related expenditure and support measures for companies accounting for almost 2% of GDP), prompting the budget deficit to increase to 2.4% in 2021. For 2022, an improvement is expected as most measures fade out and the labour market recovers, resulting in a forecasted deficit of 2.4% (followed by 2% in 2023). The public debt ratio, which increased by 10% following the outbreak of the pandemic surpassing the 60% benchmark of the Maastricht treaty, stood at 72.2% in 2021 and should remain stable this year. Consumer prices rose strongly in 2021, primarily because of a strong upswing in energy prices, with headline inflation estimated at 1.9%. The recovery in the services sector, a tighter labour market and general demand pressures are set to keep inflation at around 1.6% this year and the next, higher than in recent years.

Finland's GDP per capita – estimated at USD 51,867 (PPP) in 2021 by the IMF - is among the highest in the world and higher than the EU-27 average, allowing the country to offer a high living standard. The distribution of wealth is relatively balanced, although social inequalities have risen in recent years. Finland is the European country most impacted by an ageing population and the fall of its labour force, a phenomenon that weighs heavily on its public finances. Other challenges that the country will be facing are the decreasing productivity in traditional industries and the need for a reduction of high labour costs. Unemployment stood at 7.8% in 2021, but it is expected to continue easing towards pre-pandemic levels, with crisis-hit sectors expected to catch up substantially during 2022, when the overall rate should float around 6.8% (IMF).

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 268.81e269.56e296.02314.54329.68
GDP (Constant Prices, Annual % Change) 1.3e-2.9e3.03.01.5
GDP per Capita (USD) 48,716e48,786e53,52356,83359,545
General Government Balance (in % of GDP) -0.7-2.4e-3.1-2.4-2.0
General Government Gross Debt (in % of GDP) 59.569.5e72.272.273.6
Inflation Rate (%) 1.10.4e2.13.82.7
Unemployment Rate (% of the Labour Force) 6.77.8e7.86.86.7
Current Account (billions USD) -0.842.06-0.301.131.23
Current Account (in % of GDP) -0.30.8e-0.10.40.4

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Euro (EUR) - Average Annual Exchange Rate For 1 ZAR 0.060.070.060.060.05

Source: World Bank, 2015

 

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Latest Update: June 2022