Country Report Finland October 2009

Summary

Despite continuing revelations of campaign finance irregularities and disagreements between the parties, the Economist Intelligence Unit believes that the four-party coalition will serve out its term to early 2011.
The government will continue to focus on responding to the still-weak economy, and fiscal policy will remain expansionary. The public finances will go into deficit from 2009.
Fading inventory reductions and an upturn in domestic and external demand will see the economy improve over 2010-11. Yet growth will remain weak, following the economy's severe contraction in 2009.
After an estimated contraction of 7.1% in 2009, we expect a slow improvement, with the economy forecast to grow by 0.7% and 1.7% in 2010 and 2011, respectively.
We expect inflation to remain above the euro area average over 2010-11, at 1.4% and 1.9%, respectively (according to the EU harmonised measure), following an estimated 1.5% in 2009.
With markedly weaker export and import demand than in recent years, the current-account balance is forecast to record small surpluses over 2010 and 2011, of 1% and 1.8%, respectively, following an estimated 0.4% in 2009.

In early October the prime minister, Matti Vanhanen (Centre Party), won a vote of confidence in parliament called for by the opposition parties, which were asking for him to step down.
Drawing widespread criticism, the government has agreed to replace the current television licence system with a universal media tax to take effect in 2012, regardless of whether households or companies own a television or not.
The government's proposed budget for 2010 was approved by parliament in mid-September. It included further measures to combat rising employment.
In early October parliament approved government plans to sell off three state-owned firms, but it has not yet announced a timetable for the sales.
Despite indications of improvement in some EU economies, Finland's industrial output has yet to show signs of an upturn. Working-day adjusted figures were down by 21.2% year on year in August.
Inflation pressures in Finland remain higher than in the euro area as a whole. The EU harmonised index of consumer prices showed an annual rise of 1% in September, compared with the euro average of -0.3%.

This report covers the following industry codes:
SIC Code: 49;1;60
NAICS Code: 22;11;52