Recession hit Finland rapidly and reached depths of historic proportions

Rising exports in late 2009 portend recovery this year

Anni Sinnemäki

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The Finnish economy experienced a decline last year that is deeper than any that has taken place in any single 12-month period since the Civil War which followed the country’s independence.
      According to figures put out by Statistics Finland, total production in Finland declined by 7.8 per cent last year.
      Only in 1917-1918 has total output declined by more.
      Not even in the economic crisis of the 1990s, nor in the Second World War, did the Finnish economy fall as steeply in a single year as it did in 2009.
     
While the decline was historically deep, its effects on the lives of most Finns have not been as serious. For instance, the decline in employment has been less steep than during the recession of the 1990s.
      The state and private companies have kept employees in a buffer, averting job cuts as much as possible, according to Tuomas Rothovius, head of statistics at Statistics Finland on Monday.
     
Rothovius said during a press conference on Monday that a few other factors have eased the impact of the decline on the everyday lives of people. The state has borrowed money, with which it has paid off social benefits, and made investments with a stimulating effect on the economy.
      Interest rates are now lower than in the previous recession. People have been able to both pay off home loans and to consume, Rothovius points out.
     
The recession of the 1990s came quickly, and was largely caused by a collapse in exports.
      The volume of industrial output was in free fall from November 2008 to January 2009, said Ilkka Lehtinen, head of development at Statistics Finland.
      Lehtinen said that after the sudden collapse, the monthly changes in industrial output remained small.
      In a single year, the value of exports declined by EUR 20 billion.
     
Looking at the future, a positive sign is that investments and exports grew at the end of last year, notes Pasi Sorjonen of the Research Institute of the Finnish Economy (ETLA).
      Investment volume grew by 2.7 per cent in October-December over the previous quarter, and export volume increaed by 7.4 per cent.
      “The fairly strong surge in exports is promising. It is a sign that we have been waiting for”, Sorjonen said.
     
Meanwhile, Finland’s Minister of Labour Anni Sinnemäki (Green) said on Monday that she hopes that unemployment in Finland will peak by the middle of this year.
      “If this does not happen, and if it does not peak until next year, we will be in serious trouble”, said Sinnemäki at a meeting of EU competition ministers in Brussels.


Previously in HS International Edition:
  Unemployment high, but not as bad as originally feared (24.2.2010)
  Housing prices rising in spite of recession (1.2.2010)
  Finland getting record sum from EU structural funds to help country over recession (8.1.2010)
  Government ready to help struggling shipyards to make it through recession (15.1.2010)

Links:
  Statistics Finland: Gross domestic product contracted by 7.8 per cent in 2009

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