Past recessions have come and gone, so why does it seem that the Finnish economy is now bouncing back so slowly? Experts interviewed by Finland’s Yle News see five main factors that are hindering growth.
1. Exports markets still suffering
The global economy continues to feel the effects of the financial crisis that struck in 2008.
The United States has yet to make a recovery and economies in Finland’s immediate surroundings in Europe are only creeping forward. When trading partners suffer, exports suffer. In addition, key Finnish exports are investment goods such as machinery and wood products.
2. Faltering domestic demand
The poor state of the economy, unemployment, and regular news of companies downsizing personnel have made the Finns cautious consumers.
3. Loss of industrial footing
The electronics sector driven by Nokia has all but gone flat. The country’s wood processing industry is in deep trouble. The paper industry’s share of GNP has slowly declined for the past decade.
4. Aging population
The post-war baby boom in Finland was bigger than in other European countries. Larger segments of the population are now retiring earlier than elsewhere in Europe. The population of Europe continues to expand while it started to go into decline in Finland in 2010.
5. Poor competitiveness
Wages and salaries in Finland are still around 10 percent higher than in its main trading partners. Major pay rises were contracted just before the downswing in the economy and before the worst effects of the 2008 international financial crisis hit. Even though the level of wages is not exceptionally high, and recent pay package increases were small, it still weakens the nation’s competitive position because of lower levels of the volume of production.