ECONOMY

Finland is a highly industrialized country, producing a wide range of industrial and consumer goods. Timber and related industries are a key component of the economy, accounting for 40 per cent of all Finnish exports, but the country is consequently vulnerable to fluctuations in world market prices and demand levels for timber, paper and finished products such as furniture. Per capita annual income is currently just under US$25,000. Agriculture is relatively important by the standards of most European industrialized economies and, despite its climatic and geographical conditions (which only allow a very short growing season), Finland enjoys virtual self-sufficiency in basic foodstuffs such as grain, dairy products and root crops. The largest industrial sector is engineering, where traditional ‘metal bashing’ industries are relatively important by the standards of most industrialized countries. Mining is relatively small, although exportable quantities of gold are produced and diamond deposits were discovered in 1994. Industry is heavily dependent on imported components. Apart from paper and woodworking, the principal exports are machinery and transport equipment, metal ores and textiles. Engineering products and consumer goods are the country’s main imported products. The service sector is notable for the spectacular growth of mobile communications to which Finns are now among the world’s highest per capita subscribers. A number of Finnish companies are also prominent in parts of the global telecommunications equipment market. After a sharp decline in GDP growth in 2001 from 6 per cent to under 1 per cent, caused by a collapse in exports, Finland has undergone a gradual recovery. Estimated annual growth as of 2004 was 1.9 per cent. Unemployment rates remain stubbornly high at 9 per cent: efforts to reduce it now form a centerpiece of government economic policy. Through its geographical position and political neutrality, Finland has developed unique trading links with East and West. Its principal parners are now Germany, Sweden and the UK. Finland joined the EU along with Sweden and Austria in January 1995. Since then, after meeting the required fiscal and budgetary targets, Finland has joined the European Monetary Union and adopted the Euro at its inception in 2001. Finland is also a member of the Nordic Council and the Organization for Economic Co-operation and Development.