It blamed the problem on a decline in the timber industry as the demand for paper shrinks, the demise of Nokia, sanctions against Russia, a major trading partner, and a lot of state spending required by both the economic downturn and an aging population.
It seems to me that that is a long way of saying that Finland lacks a diversified economy. Finland has a famously well-educated population. Is there a tendency against entrepreneurship there? Is there population too small to rely on a domestic economy? Why is their economy such a one (or two) trick pony?
At a certain level of generality, Finland is having essentially the same problem as Greece. A combination of external shocks has hurt the country’s ability to compete in world markets. Ordinarily, a country might try to respond by devaluing its currency, but Finland – like Greece – cannot do so because it is in the Eurozone.
The Euro has dropped from $1.40 in 2012 to $1.10 now. But yes I think they should devalue it more to around 90c US, since most of the Eurozone is still technically in a recession. Germany should realise that a common monetary union means sometimes they will have to devalue their own currency to get other countries out of trouble.
That may not help Finland very much. Well, it will for their trade with Russia, but not with the rest of the Eurozone. The same with Greece. They need to devalue their currency with respect to other European countries and they can’t because they all use the same one.
Finland still has a GDP per person higher than France and the UK.
We generally consider them the most entrepreneurial and creative of the Nordics, and sometimes say that a very strong implementation of a creative project has a bit of “Finnish sisu”
The Finnish do stuff like sit in an arctic wilderness devoid of anything but snow and decide to build a snow hotel, sell “the colors” of autumn, or just steal and commercially weaponize Santa Claus.
Finland’s problem is basically that they have a huge border with Russia, and trade with them a lot. Consider what a state Canada would be in if their biggest trading partner, the USA, had gone through the economic implosions Russia has suffered.
It’s a smallish country with a relatively small population which means natural resources are naturally not diverse, and the success and then decline of a single company and/or industry will have an impact on the national economy that is larger than it would have been in a larger country.
That’s refined petroleum products, though, not crude oil. If anything, low oil prices help refiners. They could run into trouble if the sanctions are expanded to include Russian oil and gas exports, but I don’t think they have yet.
Let’s see… Finland has the highest state spending in the Euro Zone, a very expensive labor force due to unionization (75% of all Finns are in union jobs), has generous social programs and strong ‘automatic stabilizers’ like generous unemployment and welfare benefits. It has the least amount of income inequality in the OECD. It now has a permanent ‘stimulus’ as government continues to borrow more money to stimulate demand. All education is free in Finland, including college. Finland as instituted energy taxes to combat global warming.
So, I’m sure the headline must be wrong. Finland must be a huge economic success, because it has done pretty much every single thing progressives say will lead to rapid economic growth. It’s basically a test lab for Bernie Sanders’ economic policies. And we all know that such policies are the reality-based solution to economic hardship. So Finland is doing great!
