Finnish Economy Penna Urrila, Chief Economic Policy Adviser - PowerPoint PPT Presentation

Finnish Economy Penna Urrila, Chief Economic Policy Adviser 13.5.2014

Main Topics • Basic Facts about the Finnish economy • Economic Situation in May 2014 - Global and European Outlook: Support for a small export-driven country? - Finland and the Russian situation - Key forecast figures - Trade between Finland and Estonia 2

Finnish Economy: basic facts 3

Employment by Sector % 100 100 5.2 5.2 4.9 4.9 4.6 4.6 6 6 8.6 8.6 13.1 13.1 90 90 25.9 25.9 23.8 23.8 34 34 24.1 24.1 25.4 25.4 80 39 39 27.3 27.3 80 40.7 40.7 29.4 29.4 52.6 52.6 70 33.1 33.1 70 59.8 59.8 67.9 67.9 70.5 70.5 Primary production* 60 60 24.1 24.1 24.5 24.5 32.9 32.9 25.2 25.2 Secondary production 24.8 24.8 31.4 31.4 23 23 50 50 Public services* 23.7 23.7 31.5 31.5 18.9 18.9 Private services 40 40 9.2 9.2 24 24 6 6 19.6 19.6 30 30 18.4 18.4 7.5 7.5 47.5 47.5 17.3 17.3 46.5 46.5 44.2 44.2 41.9 41.9 17.9 17.9 5.5 5.5 20 20 39 39 5.2 5.2 34.9 34.9 32 32 28.6 28.6 22 22 10 10 17.9 17.9 17.2 17.2 15.4 15.4 12.2 12.2 9.6 9.6 0 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2005 2010 2012 *Change in statistical standards in 1975 Source: Statistics Finland 12.5.2014/raktal2/jka/EKI Talousgraafit

Finnish Exports of Goods by Branch Share of Goods Exports, % 100 Wood and wood product 4 4 5 5 7 15 90 15 16 Pulp, paper and 16 27 22 paper products 80 30 15 Metals and 13 15 70 30 9 metal products 60 Machinery, equipment 10 17 18 16 19 and vehicles 42 7 50 Electronics and 22 13 40 18 15 electrotechnics 28 31 30 Oil, chemicals and 4 11 15 23 chemical products etc. 20 20 11 10 13 10 10 15 15 12 11 10 Other products 8 7 0 1960 1980 1990 2000 2005 2010 2012 In 1960 metals and metal products includes machinery and electronics etc. Source: Board of Customs 12.5.2014/rakv ie3/jka/EKI Talousgraafit

Finnish Exports of Goods and Services 100 100 12-Month Moving Sum, Bill. EUR 90 90 80 80 70 70 60 60 50 50 Exports of Goods 40 40 30 30 20 20 10 10 Exports of Services 0 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Bank of Finland 12.5.2014/v ien10/jka/EKI Talousgraafit

Gross Domestic Product Per Capita in EU Countries (+ISL NOR) GDP per capita 2013, PPS, EU27=100 Luxembourg Norway Austria Ireland Sweden Netherlands Denmark Germany Belgium Finland Iceland United Kingdom France EU27 Italy Spain Malta Cyprus Slovenia Czech Republic Slovakia Portugal Lithuania Greece Estonia Poland Hungary Latvia Romania Bulgaria 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 Source: European Commission Forecast (11/2013) 5.11.2013/tal78/jka/EKI Talousgraafit

Finnish GDP, 2005=100 130 120 110 ”Great Finnish Depression” 1990–1993 100 Cumulative GDP decrease > 12 % 90 80 70 60 “Bad banking, bad policy, bad luck” 50 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Source: Eurostat 12.5.2014

GDP volumes Index, 2000=100 190 180 Estonia Finland 170 160 150 140 130 120 110 100 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Eurostat 12.5.2014

Unemployment rate, % 22 Euro area Estonia 20 Finland 18 United States 16 14 12 10 8 6 4 2 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ä Source: Eurostat 12.5.2014

Finnish Exports of Goods by Country 2013 55.9 billion euro Share of Goods Exports, % Sweden 11.6 Other countries 18.7 Germany 9.7 Turkey 1.2 Switzerland 1.3 Canada 1.3 Spain 1.4 Russia South Korea 1.5 9.6 Japan 1.8 Denmark 1.9 Italy 2.3 USA Poland 2.4 6.4 Norway 2.9 Estonia 3.1 Netherlands France 3.2 6.2 Belgium 3.4 UK 5.2 China 4.9 Source: Board of Customs 3.3.2014/rakvie4/jka/EKI Talousgraafit

Finnish Imports of Goods by Country 2013 58,2 billion euro Share of Goods Imports, % Russia Other countries 14.9 18.1 Tjeckien 1.1 Japan 1.1 Brazil 1.1 Switzerland 1.2 Spain 1.5 Germany Norway 2.0 12.6 Belgium 2.1 Poland 2.3 Italy 2.6 Estonia 2.9 Denmark 3.1 Sweden 11.4 United Kingdom 3.2 France 3.3 USA 3.4 China 6.3 Netherlands 5.8 Source: Board of Customs 3.3.2014/raktuo1/jka/EKI Talousgraafit

Public Finances Credible in the short run, big challenges in the longer term

Government Fiscal Position in 2014 Per cent of GDP Poland Germany Luxembourg Estonia Latvia Denmark Greece Sweden Czech Republic Bulgaria Lithuania Romania Finland Malta Belgium EU27 Italy Netherlands Austria Hungary Slovakia France Portugal Slovenia Ireland United Kingdom Spain Cyprus -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 Source: European Commission Forecast (05/2014) 6.5.2014/ennu6/jka/EKI Talousgraafit

General Government Consolidated Gross Debt in 2014 Per cent of GDP Greece Italy Portugal Cyprus Ireland Belgium Spain France United Kingdom EU27 Slovenia Austria Hungary Germany Netherlands Malta Finland Slovakia Poland Czech Republic Denmark Lithuania Sweden Romania Latvia Luxembourg Bulgaria Estonia 0 20 40 60 80 100 120 140 160 180 200 Source: European Commission Forecast (5/2014) 9.5.2014/ennu7/jka/EKI Talousgraafit

Total Tax Revenue by Country in 2014 Per cent of GDP Denmark Finland Belgium France Sweden Austria Italy Netherlands EU27 Germany Hungary Luxembourg Slovenia United Kingdom Czech Republic Greece Cyprus Malta Portugal Spain Poland Estonia Ireland Slovakia Bulgaria Romania Latvia Lithuania 0 5 10 15 20 25 30 35 40 45 50 Source: European Commission Forecast (5/2014) 9.5.2014/tal51/jka/EKI Talousgraafit

Long Term Interest Rates, % 8 10 Year Govt Bond Market Rates 7 Spain 6 Italy Finland Germany 5 4 3 2 1 Best possible credit rating (AAA) 0 08 09 10 11 12 13 14 Source: Macrobond 9.5.2014/kork21/jka/EKI Talousgraafit

Rapidly Ageing Population 80 70 60 Elderly (>65yrs) / 100 persons in 50 working age Children (<15yrs) / 100 persons in 40 working age 30 20 10 Sustainability gap in Finnish public finances ~ 5 %/GDP (EUR 10 billion) 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 pp.kk.vvvv Penna Urrila 18

Current Economic Situation: Possibilities for an export-led growth in 2014? 19

Confidence Indicators in EU 40 Balance 30 Services 20 10 Industry 0 -10 Consumers -20 -30 -40 Business, service and consumer surveys -50 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: European Commission 9.5.2014/luot2/jka/EKI Talousgraafit

New Orders in Finnish Manufacturing 2005=100 170 160 150 140 130 120 110 ? 100 90 80 70 60 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Statistics Finland 12.5.2014

Main Forecasts 2012 2013* 2014** 2015** Change or level GDP, % -1,0 -1,4 0,7 2,0 Industrial prod., % -2,1 -2,7 2,6 4,4 Private services, % 4,3 1,3 1,0 3,0 Exports, % -0,2 0,3 3,7 4,6 Imports, % -0,7 -1,8 2,9 3,0 Private consumption, % 0,3 -0,8 0,4 1,3 Private investment, % -1,2 -6,4 -2,4 2,7 Inflation, % 2,8 1,5 1,6 1,9 Unemployment rate, % 7,7 8,2 8,4 8,3 Current balance/GDP, % -1,4 -0,8 -0,1 1,2 EMU surplus/GDP, % -1,8 -2,0 -2,1 -1,2 EMU debt/GDP, % 53,6 56,9 59,6 60,5 Sources: Statistics Finland and ETLA (26.3.2014) 26.3.2014/ennu1/jka/EKI Talousgraafit

Finland depends heavily on trade with Russia: Russian final demand, % of total value added in exports Lithuania Finland Turkey Estonia Latvia Poland Bulgaria Hungary Slovenia Slovakia Czech Republic Romania Greece Italy Germany Brazil Austria China Sweden Denmark Netherlands South Korea Switzerland France Belgium Japan Norway Spain Ireland UK Portugal USA India Australia Luxembourg Canada Malta 0 1 2 3 4 5 6 7 8 Lähde: OECD pp.kk.vvvv Penna Urrila 23

Finnish Trade with Estonia Vienti Tuonti 1 745 milj. euroa 1 686 milj. euroa TEVA 8.1 % Koneet ja laitteet 6.7 % Elek troniik k a- ja sähk ö 11.7 % Elintarv ik k eet 7.3 % Puutav ara ja puutuotteet 6.5 % Metallit ja m etallituotteet 10.2 % TEVA 4.3 % Koneet ja laitteet 7.9 % Kulk uneuv ot 12.1 % Elintarv ik k eet 7.5 % Metallit ja m etallituotteet 7.5 % Kulk uneuv ot 13.0 % Mineraalien k aiv uutuotteet 0.3 % Mineraalien k aiv uutuotteet 0.1 % Kem iantuotteet 4.8 % Sellu, paperi ja paperituotteet 3.6 % Kem iantuotteet 24.3 % Muut tuotteet 24.4 % Elek troniik k a- ja sähk ö 20.4 % Muut tuotteet 16.0 % Puutav ara ja puutuotteet 2.4 % Sellu, paperi ja paperituotteet 0.8 % Lähde: jk a/12.5.2014 Lähde: Tullihallitus

Nominal Unit labour Costs Cost competitiveness has worsened 140 Index, 2001=100, s.a. Finland 130 Euro EU27 120 Sweden Germany 110 100 90 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Eurostat 9.5.2014/yktk1/jka/EKI Talousgraafit