Country Report Finland December 2008

Summary

The Economist Intelligence Unit believes that the four-party coalition will hold together over the next two years.
The government will co-operate more closely with NATO and remain committed to the EU, despite some increase in Euroscepticism.
There will be tax cuts aimed at stimulating the economy and boosting employment in the 2009 budget, financed by a large government surplus.
Although real GDP growth will still be stronger than the average for the euro area, growth is forecast to fall from an estimated 1.6% in 2008 to -0.7% in 2009, before picking up to 0.9% in 2010 as the world economy recovers gradually.
Inflation, which rose sharply throughout most of 2008 and will average an estimated 3.9% (EU harmonised measure) for the year, is forecast to fall to an average of 1.5% in 2009 and 1.3% in 2010.
Increased spending to stimulate the economy and weaker revenue growth will see the general government surplus fall from an estimated 4.6% of GDP in 2008 to 1.1% in 2009 and 1.3% in 2010, but remain one of Europe's top performers.
As a proportion of GDP, the current-account surplus is likely to continue its decline in 2009-10, but will remain substantial.

In talks with other EU ministers of agriculture, it was agreed that Finland could keep 10% of its subsidies tied to output, at a time when other member states are phasing out output-related subsidies in favour of more general subsidies.
The government revealed its long-term climate and energy strategy on November 6th, outlining how it aims to battle climate change while at the same time ensuring a sufficient energy supply for households and industry.
The sharper-than-expected slowdown in economic growth in the second half of this year and the weaker outlook for 2009 have prompted the government to reassess its economic assumptions underlying the 2009 budget.
Finland is to participate in an emergency funding package for Iceland. The total loan package will be worth around US$10bn and will be provided by the four Nordic countries, the IMF, Russia and Poland.
The economy barely grew in the third quarter of 2008. Seasonally adjusted quarter-on-quarter GDP grew by only 0.1% according to preliminary data from Statistics Finland.
Falling oil prices have helped to reduce consumer price inflation, which fell from a high of 4.7% (national measure) in August to 4.4% in October and 3.6% in November, but this was still much higher than the EU average.

Source: Country Report

This report covers the following industry codes:
SIC Code: 37;48;60;15
NAICS Code: 336;517;52;23