Industry is export- and quality-oriented. Large high-tech sector. World leader in pulp and paper. Exports quick to recover from recession. Low inflation, now less than 2% a year. Improved foreign investment incentives. Gateway to Russian and Baltic economies.
Weaknesses
Severe recession following 1980s' fast growth; real GDP declined 15% during 1991û1993. High level of public sector and foreign debt, the latter 22% of GDP. Highest unemployment rate in Western Europe, up from 3.5% in 1990 to 20% in 1993. Small domestic market and peripheral position in Europe.
Profile
Finland is a market economy and still wealthy, although it is just emerging from its worst recession in 60 years. The boom years of the 1980s, when GDP expanded by almost 4% a year, came to an abrupt end in 1990. The collapse of the former Soviet Union, which had taken 28% of Finland's exports, was largely responsible for the downturn. A rapid rise in unemployment and business failures pushed up government spending. The floating of the "markka" in 1992 and austerity measures, including welfare benefit cuts, higher taxes and wage restraints, improved Finland's competitiveness. Exports have largely recovered. However, full recovery will take longer and unemployment is likely to stay above 15% for some years. With private investment at a ten-year low and the pressure of EU membership looming, the economy will take time to recover.
