Economy grew last year despite industrial action in wood and paper industry

Household indebtedness rising to high level

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In economic terms Finland is doing well, despite last summer's wood and paper industry industrial action and the considerable negative impact it had on the national economy.
      According to the Statistics Finland advance information, Finland's gross domestic product (GDP) grew by 2.1 percent last year. The growth rate for 2004 was 3.6 percent.
      The GDP, or the combined value added of the goods and services produced, amounted to EUR 155 billion last year, Statistics Finland reveals.
     
In international comparisons, Finland is also holding its own. Unlike in many other Euro-area countries, unemployment in Finland is on a slow but apparently sure decline while the GDP keeps growing steadily.
      Inflation is under control and the public finance remains balanced.
      As in the year before, growth in demand relied heavily on household consumption and private investments last year.
      In the volume of exports there was a seven percent increase, compared to the ten percent increase in imports. Fixed investments in the economy as a whole saw an increase of a couple of percentage points.
      Investments in residential buildings increased by four percent, whereas in machinery, equipment and transport equipment, the percentage for total investments was reduced by 5.5 percent compared to the year before.
     
There was a moderate rise in the buying of new cars, but a more significant jump in purchases of domestic appliances, entertainment electronics, furniture, and other interior items.
      An upward trend in purchases of durable consumer goods resulted in an 8.5-percent growth, while building construction increased by 5.4 percent.
      In 2005, the disposable income of households grew only by 0.4 percent in real terms.
      The modest increase is explained by the five-percent growth in paid direct taxes, the rise in compulsory social security contributions, as well as the rise in interest paid on housing loans.
     
The indebtedness rate, or the debt-equity ratio, of households continued its climb, reaching 86.5 percent by the end of September.
      The savings rate, or the proportion of savings relative to disposable income, became slightly negative and was -0.4 percent, compared to +2.8 percent in the year before.
      The unemployment rate was 8.4 percent last year, against 8.8 percent in 2004. The total number of the unemployed averaged at 220,000 in 2005.
     
Because of the industrial action, the paper industry’s productivity saw a ten-percent decline relative to the year before.
      The labour dispute’s negative impact on the GDP was estimated to be in the region of one percent.


Previously in HS International Edition:
  Finland heads WEF competitiveness league table for fourth time (29.9.2005)
  "Why can´t we Americans be more like Finland?" (16.8.2005)

Links:
  Statistics Finland press release - Gross domestic product grew by 2.1 per cent last year

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