Finland’s economy is characterized by a high-level of industrialization, a small domestic market, and openness to trade. It is a mixed economy, which combines a free market with a Nordic welfare state model. In 2022, the gross domestic product (GDP) in Finland amounted to over 269 billion euros. The high economic output per capita is similar to that of other Western European economies, such as Germany, Austria, and Sweden. In the early 2000s, Finland was one of the best performing economies within the EU, but the global financial crisis hit the country’s exports and domestic demand hard. In recent years, economic growth in Finland has remained positive but modest compared to other EU countries.
According to preliminary data, Finland’s GDP growth rate was estimated at 1.6 percent in 2022. Since the 2008-2009 financial crisis, Finland has faced difficulties catching up to its peer countries in export industry competitiveness, productivity, and employment rates. The GDP decline of 8.1 percent in 2009 was the worst since the "great depression" of the early 1990’s. Even though the economic growth has been positive from 2016 onwards, the general government budget has remained in deficit. Correspondingly, the national debt has increased dramatically over the past decade, peaking at an all-time high of 74.7 percent in 2020. In 2021, the general government budget deficit amounted to roughly 2.1 billion euros.
As an open export-led economy, foreign trade is vital for the Nordic country. In 2022, exports of goods and services accounted for 45 percent of Finland’s GDP. Consequently, Finland is also vulnerable to external shocks and conjuncture in the international economy. The backbone of the Finnish economy has traditionally been forestry, in particular exports of wood, paper, and chemical pulp. Although the forest industry products still account for around 18 percent of export revenue, machinery and equipment now constitute a larger share of export trade. Moreover, Finland excels in the ICT technologies, gaming, cleantech, and biotechnology sectors. Imports mainly consist of industrial products, raw materials for industrial use, consumer goods, and transport equipment.
Finland's economic growth was already slowing down by the end of 2019, but the coronavirus (COVID-19) crisis plunged the economy into recession during the second quarter of 2020. However, the Finnish economy has fared better than predicted in the early forecasts of spring 2020. It is estimated that Finland’s total output will decline to 0 percent in 2023, and return to growth in 2024 and 2025 as demand picks up. According to monthly data, the inflation rate was negative between April and June 2020, meaning that overall consumer prices fell slightly despite the COVID-19 lockdown measures.
According to preliminary data, Finland’s GDP growth rate was estimated at 1.6 percent in 2022. Since the 2008-2009 financial crisis, Finland has faced difficulties catching up to its peer countries in export industry competitiveness, productivity, and employment rates. The GDP decline of 8.1 percent in 2009 was the worst since the "great depression" of the early 1990’s. Even though the economic growth has been positive from 2016 onwards, the general government budget has remained in deficit. Correspondingly, the national debt has increased dramatically over the past decade, peaking at an all-time high of 74.7 percent in 2020. In 2021, the general government budget deficit amounted to roughly 2.1 billion euros.
As an open export-led economy, foreign trade is vital for the Nordic country. In 2022, exports of goods and services accounted for 45 percent of Finland’s GDP. Consequently, Finland is also vulnerable to external shocks and conjuncture in the international economy. The backbone of the Finnish economy has traditionally been forestry, in particular exports of wood, paper, and chemical pulp. Although the forest industry products still account for around 18 percent of export revenue, machinery and equipment now constitute a larger share of export trade. Moreover, Finland excels in the ICT technologies, gaming, cleantech, and biotechnology sectors. Imports mainly consist of industrial products, raw materials for industrial use, consumer goods, and transport equipment.
Finland's economic growth was already slowing down by the end of 2019, but the coronavirus (COVID-19) crisis plunged the economy into recession during the second quarter of 2020. However, the Finnish economy has fared better than predicted in the early forecasts of spring 2020. It is estimated that Finland’s total output will decline to 0 percent in 2023, and return to growth in 2024 and 2025 as demand picks up. According to monthly data, the inflation rate was negative between April and June 2020, meaning that overall consumer prices fell slightly despite the COVID-19 lockdown measures.
