The Economy of Finland

Transcription

1 The Economy of Finland Aug 30st 2013, Finnish Ministry of Foreign Affairs Presentation for the American Fulbright Grantees Petteri Rautaporras, Economist at the Federation of Finnish Technology Industries

2 Introduction to the Economy of Finland Economic history; how did we get here? Economic development International comparisons Where are we now? Current economic situation Production structure Where are we going? Threats and possibilities Finnish technology industries

3 Wealth and Health by Gapminder.org Gapminder is a non-profit venture a modern museum on the Internet promoting sustainable global development and achievement of the United Nations Millennium Development Goals. Hans Roling, Professor of International Health at Karolinska Institutet Unveiling the beauty of statistics for a fact based world view

4 History and international comparison

5 Production Volume Development in Finland Annual GDP Growth in Constant Prices 25% 20% 15% 10% Autonomous Grand Duchy of Finland (Russia) Finnish Civil war World War II 1973 First Oil crisis Strong industrial growth 1979 Second Oil crisis 2008 Global financial crisis 2002 Finland adopted the euro (Fixed since 1999) Fall of the USSR 5% 0% -5% Russification Urbanization Emigration IT bubble -10% -15% -20% Republic of Finland Grand Principality of Finland (Sweden) ~ 1939 The Great Depression Last war reparations paid to the USSR (Total reparations were 4,8 Bill. in 2009 Euros) Real GDP growth Average ( ) s Depression Finland joins the EU Source: Statistics Finland, Various historical sources

6 Changes in the Production Structure Production structure in Finland and the US 70% Share of GDP 60% 50% 40% 30% 20% 10% 0% US, Agriculture US, Total industry FIN, Agriculture FIN, Total industry Source: Statistics Finland, Bureau of Economic Analysis

7 Changes in the Production Structure in Finland 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Primary production Secondary production Services

8 Production Volume Development Real GDP Index = Finland USA Source: Statistics Finland, Bureau of Economic Analasys, IMF

9 GDP and GDP per Capita in 2012 GDP, Billion USD in current prices Rank Country United States ,8 2 China 8 227,0 3 Japan 5 964, Philippines 250,4 37 Finland 250,1 38 Greece 249, Marshall Islands 0, Kiribati 0, Tuvalu 0,04 Share of the world GDP (PPP) Rest of the World 66,3 % China 11,5 % USA 21,9 % Finland 0,3 % GDP (PPP) per capita, USD Rank Country Qatar Luxembourg Singapore Hong Kong United States UAE UK Finland Japan Burundi Zimbabwe Congo, DR 369 Source: IMF / World Economic Outlook April

10 International Rankings Economy Year Finland USA China Out of # Globalization Index Index of Economic Freedom The Global Enabling Trade Report The World Competitiveness Scoreboard Global Competitiveness Report Economist Digital economy rankings Standard of Life Year Finland USA China Out of # Children's Index Rank Environmental Performance Index Global Peace Index Mother's Index Rank Women's Index Rank Worldwide Press Freedom Index Corruption Perceptions Index Economist Index of Democracy Human Development Index (inequality-adjusted HDI) Legatum Prosperity Index Life expectancy at birth (CIA) The Global Gender Gap Report World Audit - Corruption Rank World Audit - Democracy Rank World Audit - Press Freedom Rank Newsweek's Worlds Best Countries Happy Planet Index Programme for International Student Assessment (PISA) /6/2 16/35/ /1-12/ UN Gini - Income equality Economist Quality-of-life index Source: Various

11 Income Distribution and Poverty Share of population with below 40 per cent of the current median income 30 % Denmark Czech Republic FINLAND Hungary Luxembourg Iceland France Ireland Austria Belgium Slovak Republic Netherlands Sweden Slovenia Germany New Zealand Norway Switzerland Greece Estonia Poland United Kingdom OECD - Average Italy Canada Portugal Australia Spain Korea Turkey Japan Chile UNITED STATES Israel Mexico After taxes and transfers Before taxes and transfers Source: OECD

12 Manufacturing Labour Costs in 2010 Average labour cost per hour in manufacturing industry EUR/h NOR LCS CHE BLS BEL SWE DNK FRA DEU LCS LCS LCS LCS LCS FIN LCS NLD AUT AUS LCS LCS BLS IRL LCS LUX CAD USA LCS BLS BLS ITA LCS JPN BLS ESP GBR GRC NZL LCS LCS LCS BLS ISR BLS SGP BLS SVN LCS CYP KOR MLT PRT ARG CZE LCS BLS LCS LCS BLS LCS SVK LCS BRA BLS EST HUN POL TWN LTU LCS LCS LCS BLS LCS LVA LCS MEX ROU BGR PHL BLS LCS LCS BLS EUR/h 41,4 40,1 39,7 36,9 34,6 34,0 33,0 31,4 31,4 31,2 30,6 29,9 29,1 26,9 26,2 25,8 24,1 21,6 21,0 16,7 15,5 15,2 14,4 13,5 13,0 12,5 11,8 10,5 9,5 9,3 7,7 7,6 7,2 6,8 6,4 6,3 5,1 5,1 4,7 4,0 2,6 1,4 Source: Eurostat, Bureau of Labour Statistics

13 Investments in Research and Development GDP share of R&D investments 5,0 % 4,5 % 4,0 % 3,5 % 3,0 % 2,5 % 2,0 % 1,5 % 1,0 % 0,5 % GDP share of R&D Israel Finland South Korea Sweden Japan USA Germany France EU27 UK China Czech Republic Russia Hungary Poland 0,0 % EU27 Czech Republic Germany France Hungary Poland Finland Sweden UK Russia USA China Japan South Korea Israel Source: Eurostat, OECD

14 Finnish economy today

15 Production Volume Development in Finland Volume index of output = Technology industry Total industry Real GDP Source: Statistics Finland

16 Unemployment Annual unemployment rate % 1990 s Depression Financial crisis 8 6 IT Bubble Finland USA Source: Statistics Finland, Bureau of Labor Statistics, IMF

17 Finnish Exports of Goods Industry shares of Finnish exports of goods 100% 90% 80% 70% 60% 50% 40% % Other exports of goods Chemical industry Forest industry Textile and clothing industry Food industry Technology industry 30% 20% 10% 0% Electronics and the Electrotechnical Industry Mechanical engineering Metals industry Source: Board of Customs

18 Technology Industry Exports Exports of goods and services Bill Export of Goods Export of Services Source: Statistics Finland

19 Technology Industry Export of Goods from Finland by Area in 2012 Total goods exports 26,5 billion euros* North America 2.2 billion 8.2 % Western Europe 12.0 billion 45.2 % Central and Eastern Europe 5.3 billion 20.2 % South and Central America 1.5 billion 5.5 % Africa 0.8 billion 3.0 % the Middle East 0.6 billion 2.3 % Asia 4.1 billion 15.6 % *) In addition to goods exports the sector exports services worth about 12 billion euros. Source: National Board of Customs, Statistics Finland

20 Growth prospects for year 2013 North-America USA +1,9 % Canada +1,7 % Central- and South-America Brazil +3,0 % Mexico +3,2 % Argentina +2,6 % Venezuela +0,9 % Columbia +4,0 % Chile +5,0 % Peru +6,0 % GDP 2013/2012, % Western-Europe Germany +0,6 % UK +0,8 % France -0,2 % Italy -1,4 % Spain -1,6 % Netherlands -0,8 % Switzerland +1,2 % Sweden +1,4 % Belgium +0,1 % Norway +2,5 % Austria +0,7 % Denmark +0,6 % Greece -5,0 % Finland +0,2 % Portugal -2,7 % Irland +0,8 % Africa South-Africa +2,7 % Nigeria +6,8 % Egypt +2.0 % Central- and Eastern-Europe Russia +2,9 % Turkey +3,9 % Poland +1,2 % Czech Rebublic -0,3 % Romania +2,0 % Ukraine +0,8 % Unkari 0,0 % Slovakia +0,9 % Slovenia -1,5 % Lithuania +3,3 % Latvia +3,7 % Estonia +2,9 % Middle East Saudi Arabia +4,5 % Israel +3,4 % Asia China +7,8 % Japan +1,4 % India +6,1 % Australia +2,6 % South-Korea +2,8 % Indonesia +6,2 % Taiwan +3,3 % Thailand +5,0 % Malaysia +5,2 % Singapore +2,2 % New Zealand +2,7 % Philippines +6,1 % Vietnam +5,4 % Lähde: Consensus Forecasts, May

21 Technology Industry Personnel Personnel in Finland and abroad (30.6) Personnel in Finland Personnel in subsidiaries abroad Source: Statistics Finland, The Federation of Finnish Technology Industries labour force survey

22 Technology Industry Personnel in Subsidiaries Abroad by Country in 2011 Other Countries, , 23 % China, , 20 % hungary, 6 400, 2 % Russia, 6 800, 2 % Italy, 6 900, 2 % India, , 12 % France, 7 200, 2 % UK, 9 100, 3 % Poland, , 3 % Mexico, , 5 % Sweden, , 6 % Brazil, , 6 % USA, , 7 % Germany, , 7 % Source: The Federation of Finnish Technology Industries labour force survey

23 Technology Industry Personnel in Subsidiaries Abroad Western Europe and North America Asia, Oceania, Eastern Europe and Latin America The Middle East and Africa Source: The Federation of Finnish Technology Industries labour force survey

24 Finnish economy tomorrow

25 Finnish Exports up to EUR Billion Short of Annual Target Level Export of goods and services by quarter, billion euros, at current prices Exports needed to avoid extra running into debt in the public sector Exports, realized Working day and seasonally adjusted index. Latest information January-March Source: Statistics Finland

26 National dept* is rising fast because of the drop in the level of export and expansion of public sector Billion euro, Monthly balance *) Respectively debt of municipalities was 7.1 billion at the end of year 2005 and 12.5 billion at the end of year Source: State Treasury

27 Turnover of the Technology Industry in Finland =100 Change: 1-5,2013 / 1-5,2012, % Metals industry -9 % Information technology +11 % Mechanical engineering -8 % Electronics and electrotechnical industry -14 % Consulting engineering +2 % Seasonally adjusted turnover index, latest information 5/2013. Share of total turnover in 2012: mechanical engineering 41 %, electronics and electrotechnical industry 26 %, metals industry 14 %, information technology 11 %, consulting engineering 8 %. Source: Statistics Finland

28 Breakdown of World Economic Growth in 2013 (forecast) with the Export Shares of Technology Industry GDP growth in 2013, % North America Average growth: +1,9 % Western Europe Japan China India Rest of Asia Russia Rest of Eastern Europe The width of the bar indicates the export share of technology industry from Finland in 2012, % Brazil Rest of Lat. Am. Middle East, Africa Source: IMF, Board of Customs

29 Situation and Outlook The Finnish industry can t compete with prices but with quality Instead of producing more we need to do things better Growth prospects in the developed countries are low at best Companies need to expand to growing markets Production structure and product portfolio needs to be diversified Ageing population poses constraints to State budget and labour supply Small and medium size companies

30 Long-Term Outlook and Challenges Global Structural Change Set to Continue Apace Industrial production and services will relocate to rapidly developing economic areas Strong growth, large markets, cheap labour and increasing expertise will increase the attractiveness of these regions. Competition over Skills and Raw Materials Set to Increase Due to an increase in retirement, the sector s annual recruitment need in Finland will rise considerably in the coming years. The availability of reasonably-priced energy also threatens to become an investment bottleneck in Finland Combating Climate Change A challenge as costs are set to grow faster than in competitor countries An opportunity for new environmental and energy technologies

31 Finnish Technology Industry

32 The Technology Industry the Most Important Sector in Finland 55% of total Finnish exports. 80% of private-sector R&D investment. Some 290,000 employed directly in the sector, a good 720,000 employed in total, equalling about 30% of the entire Finnish labour force. The Federation of Finnish Technology Industries has some 1,600 member companies

33 The Technology Industry in Finland Electronics and Electrotechnical Industry Data communications equipment, instruments, electrical machinery Turnover (2012) 16.3 billion euros Personnel ( ) Metals Industry Steel products, non-ferrous metals, castings Turnover (2012) 9.4 billion euros Personnel ( ) Mechanical Engineering Machinery, metal products, vehicles Turnover (2012) 27.9 billion euros Personnel ( ) Consulting Engineering Expertise for construction industry and infrastructure Turnover (2012) 5.2 billion euros Personnel ( ) Information Technology IT services, applications and programming Turnover (2012) 6.8 billion euros Personnel ( )

34 Technology Is Everywhere

35 The Technology Industry is also about Services

36 Welcome to Helsinki! Apparently not a bad place to be The Economist Intelligence Unit's World's Most Liveable Cities 2012 Rank City Country 1 Melbourne Australia 2 Vienna Austria 3 Vancouver Canada 4 Toronto Canada 5 Calgary Canada 6 Adelaide Australia 7 Sydney Australia 8 Helsinki Finland 9 Perth Australia 10 Auckland New Zealand 12 Osaka Japan 12 Geneva Switzerland 16 Paris France 18 Tokyo Japan 34 Washington DC USA 43 Los Angeles USA 55 London UK 56 New York USA Monocle's Most Liveable Cities Index 2013 Rank City Country 1 Copenhagen Denmark 2 Melbourne Australia 3 Helsinki Finland 4 Tokyo Japan 5 Vienna Austria 6 Zürich Switzerland 7 Stockholm Sweden 8 Munich Germany 9 Sydney Australia 10 Auckland New Zealand 11 Hong Kong China 12 Fukuoka Japan 13 Kyoto Japan 14 Paris France 15 Singapore Singapore 16 Hamburg Germany 17 Honolulu USA 18 Madrid Spain 19 Vancouver Canada 20 Berlin Germany 21 Barcelona Spain 22 Amsterdam Netherlands 23 Portland USA 24 San Francisco USA 25 Düsseldorf Germany Source: Economist Intelligence Unit, Monocle