Finland could See a Third Year of Negative Economic Growth

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Over the last three years, the Finnish economy has been suffering significantly from what has been recognized as an unprecedented slump. The GDP within the country is currently set to see a decline for the third year in a row. Yet, this country still pays for an inefficient and bloated socialized health care program that consumes much of the tax payers’ expenditures.

What do you expect if tens of thousands of your citizens are unwilling to pay for themselves?


Over the last three years, the Finnish economy has been suffering significantly from what has been recognized as an unprecedented slump. The GDP within the country is currently set to see a decline for the third year in a row. Yet, this country still pays for an inefficient and bloated socialized health care program that consumes much of the tax payers’ expenditures.

What do you expect if tens of thousands of your citizens are unwilling to pay for themselves?

Unimpressive Economy

After two years of negative growth, the estimation is that Finland’s GDP will decline by a further 0.4% by the end of 2014. Even the recession that Finland experienced in the 1990s did not hit the country as hard as the current economic flaws. Performance figures regarding the economy have remained stagnant since 2008, and if the economy does not start to make progress soon, experts are implying that a decade may be lost in growth possibility. Illinois, does that ring a bell?

According to Statistics Finland, the national economic output for Finland saw a contraction of 0.8% this July in comparison to the previous year, and industrial output is 2.6% lower than in 2013.

There are numerous reasons why the Finnish economy could be deteriorating.  A major one, mentioned above, correlates with their socialized health care program.  But another reason is that the exports for the country have not returned to their expected growth rates. In particular, exports to Russia have seen a serious drop. Well, at least Finland is not being invaded by them.

Furthermore, problems with the Finnish economy are not being helped by the fact that Eurozone growth remains slow. The Russian economy has seen a downturn due to the Ukraine crisis which they have and are causing, and international sanctions.  If these issues continue, then economic activity could worsen for several years into the future. However, if the economy in the Eurozone recovers, then Finland’s GDP has the potential to grow by 0.8% in 2015. Still, it’s nothing to write home about.

Credit Issues and Government Debt

Recently, the government in Finland pushed austerity policies through that is around 2.8% of the projected GDP for 2018. This has delivered approximately $8.1 billion worth of tax increases and spending cuts to the country since 2011 in an attempt to hold a AAA rating. However, the government, which last month shrank to four parties after initially beginning with six, has failed to offer much in the way of economic policy goals. Many people are wondering; what will it take for a European country such as Finland to drop their generous social welfare infrastructure which just degrades entire economies?

Indeed, Finnish Prime Minister Alexander Stubb has fallen short on his promise to halt debt growth by 2015, and has missed its central-government deficit target of 1%. The employment rate has not risen to 72% as projected, and instead, the country has lost its much-needed AAA rating, receiving an AA+ from Standard & Poor’s. The downgrade in credit reflects a pre-existing concern that the Finnish economy could suffer from continued stagnation.

Furthermore, the downgrade in credit could mean that the country will be expected to pay a further 100 million euros in terms of interest on national debt, according to the finance minister, Antti Rinne. By the end of 2015, the national debt in Finland is estimated to have grown to approximately €102 billion, causing interest payments of around €1.7 billion.

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