Finland Economy

by | August 24, 2021


As a country starting with F according to Countryaah, Finland has developed from a poor agricultural country into a modern industrial and service society in just a few decades. With the exception of the timber industry, which was already important in the 19th century, industrialization was only pushed forward after the Second World War due to reparation claims from the Soviet Union. The collapse of the Soviet Union – an important trading partner – led to a severe economic crisis in the early 1990s. However, joining the EU and opening up new sales markets in the Baltic Sea region have made a decisive contribution to the consolidation. Finland was able to push the high inflation rates of the 1980s down to 1.2% (2014). Unemployment fell from 18.4% in 1994 to 8.6% in 2014. Due to the high dependency on exports, the global economic and financial crisis in 2009 led to a brief but severe economic downturn. Of the employed, around 4% work in agriculture and forestry, 23% in industry and construction, and 73% in trade and the service sector. With a Gross national income (GNI) of (2017) US $ 44,580 per resident, Finland is one of the European countries with very high prosperity.

Foreign trade: The trade balance is almost balanced (import value 2014: € 57.8 billion; export value € 56.0 billion). The most important export goods are paper, pulp, sawn and plywood, machines, electronics, electrical engineering, iron and steel, chemical products and ships. The main imports are crude oil, machinery, chemical products, vehicles, food and electrical engineering products. The main trading partners are Sweden, Germany, Russia, the Netherlands and Great Britain. Most of Finland’s foreign trade is carried out by ship.


The share of the agricultural sector in GDP has steadily decreased in the last few decades, dropping to 2.8%. Agriculture, which is structured as a smallholder, mainly breeds cattle (mainly dairy farming). Only about 6.7% of the area of ​​Finland is designated as arable land (arable land: 3.4%). The main crops are wheat as bread grain and barley and oats as feed grain, as well as potatoes and sugar beets. The most productive agricultural areas are in the south and south-west near the coast. The best soils (postglacial marine clays) and the most favorable climate are found here. The proportion of arable land decreases towards the north and east. There arable farming goes over to livestock as the main branch of agricultural production. There are around 187,000 reindeer in northern Finland held.

Forestry: Almost three quarters of the total land area is taken up by forest. Finnish forests are 35% state-owned and only 7% belong to the timber industry. Forest ownership is still an important source of income for the smallholders, even if they leave the cultivation to the corporations. The wood and paper industry is one of the most important Finnish export sectors. Finland is the world’s second largest cardboard and paper exporter after Canada.

Fisheries: The fishing industry is of little importance and cannot meet domestic needs. In 2013, 181 460 t of fish were landed (50% herring), of which 13 610 t were farmed products (92% rainbow trout).

Service sector

The contribution of the tertiary sector to the gross domestic product (GDP) is increasing continuously (2014: 71.2%), mainly as a result of the disproportionately growing areas of banking, insurance and communication.

Tourism: Although tourism is gaining in importance, it is rather underdeveloped with around 5.7 million overnight stays by foreign guests (mainly Swedes, Germans and Russians) per year. The reasons are the short times for summer tourism and the high cost of living compared to other European travel countries. The Finnish Lake District is a popular summer vacation area.

Natural resources

Finland has few major mineral deposits. The main mining products are copper, nickel, zinc, cobalt, gold, chromium and iron. In addition, industrial minerals such as limestone, dolomite, feldspar, quartz sand, clay and loam and peat are mined.

Energy industry

Due to the climate and the energy-intensive industries, Finland has an above-average annual energy consumption of 4.2 t toe (crude oil equivalent, oil equivalent) per capita. Since there are no deposits of oil, natural gas or coal in Finland, the country is heavily dependent on energy imports. 29.8% of the required energy is covered by oil and natural gas, 33.3% by hydropower, peat and wood, 18.4% by nuclear power and 10.1% by coal. Finland has two nuclear power plants at Loviisa and at Olkiluoto, each with two reactors. A fifth reactor is under construction.


The share of the manufacturing industry (including construction) in GDP is 26.0%. However, there has been a significant shift in industry, also triggered by the economic slump in the early 1990s. The processing of forestry products has lost its traditional role as the backbone of industry (13.0% of industrial value added). The factories in the wood and paper industry have gone through a process of concentration that also included international ties. These companies, which are now oriented towards raw materials and transport costs, are mainly located in southern Finland (lake district and coastal areas). The electrical and electronics industry has lost a lot of its importance due to relocation abroad and due to plant closures (9.8% of industrial value added). Other important sectors are mechanical engineering (10.8% of industrial value added), metal production and processing (13.5%), the chemical and pharmaceutical industry (7.9%) and the food and beverage industry (9.0%)). The construction industry generates 6.2% of GDP.


Despite the sparsely populated country, Finland has a well-developed road network with a length of 78 100 km. The car density increased from 256 (1980) to 584 (2014) per 1,000 residents. The route network of the railway (Russian broad gauge) amounts to around 5,920 km; Of these, 3,067 km are electrified. The inland waterway network comprises 9 812 km of partly natural and partly man-made waterways. Inland shipping on the lakes is only used for tourism. The Saimaa Canal, which was leased from the USSR to Finland in 1983, connects part of south-eastern Finland with Russia and the Gulf of Finland. Important seaports (total throughput in 2014: 96.1 million t) are owned by Porvoo (Sköldvik oil port), Helsinki and Kotka, Hamina, Naantali and Rauma. Since these freeze over in winter, Finland has very powerful icebreakers. There is a rail ferry service for freight wagons between the southern Finnish port of Hanko and Lübeck-Travemünde. Finland is connected to Sweden, the Baltic States and Germany (Travemünde) by a dense network of car and passenger ferries. The Finnish aviation network is one of the densest in Europe (2013: 148 airports), the most important international airport is Helsinki-Vantaa with around 16 million passengers per year.

Finland Economy