Finland

Finland has experienced rather low growth in the past, with +1.2% on average over the last 20 years and just +0.6% for the past decade. GDP declined by -2.9% in 2020, much less than the EU average. The rebound has mainly been driven by government consumption and exports. The country benefits from a dynamic manufacturing sector that enables it to support its current account surplus. Growth was strong at +3.0% in 2021 and +2.1% in 2022, with consumer spending supported by the release of excess savings post-Covid. The unemployment rate fell from 7.6% in 2021 to 6.8% in 2022 and we expect a slight increase to 7.1+% in 2023.

High inflation and policy tightening are weighing on domestic demand and the slowing of the global economy leads us to project GDP growth of +0.2% in 2023. The economy will strengthen gradually but output growth will remain moderate at +1.7% in 2024. Inflation reached 7.1% in 2022, with energy and food prices being the main drivers. After reaching the peak in the last quarter of 2022, inflation should decelerate to about 5.5% in 2023, before declining to 2.6% in 2024. Tighter credit constraints are also weighing on housing prices even though the real estate market seems fairly valued in Finland.

Finland ranks 20th in the World Bank’s 2020 Doing Business ranking. While good overall, this position is lower than that of the other Nordic countries. The main areas of improvement are access to credit and the protection of minority investors. However, the country tops the list when it comes to resolving insolvencies. Moreover, it is worth mentioning Finland's inclination towards innovation, as seen in the advancement of its digital infrastructure, a characteristic common to Nordic countries.

Like in other Nordic countries, the Finnish political system is regarded as a model of transparency and efficiency. The country is ruled by the liberal conservative National Coalition in a right-wing coalition with the Finns Party, the Swedish People’s Party and the Christian Democrats. Political opposition is more often constructive than seen elsewhere.