Economic Survey Spring 2023 Economics department 23.3.2023 1 Key forecast figures 2 2 Other key forecast figures 3 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Thank you Mikko spolander, Director general firstname.lastname@gov.fi vm.fi | @VMuutiset Media and Communications Unit viestinta.vm@gov.fi Media Service (Mon-Fri; 9am - 4pm EET): Tel. +358 2955 30500 45 image2.png image4.svg .MsftOfcThm_Text1_Fill_v2 { fill:#FFFFFF; } image12.emf 2021 2020 2021 2022 2023** 2024** 2025** EUR bn GDP at market prices 251 -2.4 3.0 2.1 -0.2 1.3 1.6 Imports 99 -6.2 6.0 7.5 -1.5 2.8 4.1 Total supply 349 -3.4 3.8 3.6 -0.6 1.8 2.4 Exports 99 -7.8 6.0 1.7 1.2 3.9 3.8 Consumption 190 -2.3 3.7 2.3 0.0 1.0 1.5 private 128 -3.8 3.6 2.1 -0.6 1.4 2.0 public 62 1.2 3.9 2.9 1.3 0.2 0.6 Investment 59 -1.0 0.9 5.0 -0.6 0.2 2.5 private 49 -3.3 4.1 6.1 -2.6 -0.1 0.2 public 10 9.3 -11.8 0.0 9.5 1.6 12.1 Total demand 349 -3.4 3.8 4.0 -0.6 1.7 2.3 domestic demand 250 -1.7 3.0 4.9 -1.4 0.8 1.7 change in volume, % image13.emf 2020 2021 2022 2023** 2024** 2025** GDP, EUR bn 238 251 267 277 287 298 Services, change in volume, % -2.9 4.3 2.8 1.7 1.2 1.0 Industry, change in volume, % -1.5 2.0 2.5 -1.5 0.9 1.8 Labour productivity, change, % 0.2 0.9 1.8 1.0 1.0 1.1 Employed labour force, change, % -1.5 2.4 2.5 -0.4 0.3 0.4 Employment rate, % 70.7 72.3 73.8 73.6 73.8 74.2 Unemployment rate, % 7.7 7.7 6.8 7.0 6.8 6.6 Consumer price index, change, % 0.3 2.2 7.1 5.5 2.5 1.6 Index of wage and salary earnings, change, % 1.9 2.4 2.4 4.6 3.8 3.1 Current account, EUR bn 1.3 1.2 -10.3 -4.9 -3.5 -4.2 Current account, relative to GDP, % 0.6 0.5 -3.9 -1.8 -1.2 -1.4 Short-term interest rates (3-month Euribor) , % -0.4 -0.5 0.3 3.5 3.6 2.6 Long-term interest rates (10-year govt. bonds) , % -0.2 -0.1 1.7 3.3 3.4 3.2 General government expenditure, relative to GDP, % 57.2 55.8 53.4 55.4 55.5 55.7 Tax ratio, relative to GDP, % 41.8 43.1 43.1 42.6 42.4 42.1 General government net lending, relative to GDP, % -5.6 -2.7 -0.8 -2.6 -2.6 -3.1 Central government net lending, relative to GDP, % -5.5 -3.2 -1.6 -3.4 -3.4 -4.1 General government gross debt, relative to GDP, % 74.7 72.6 73.0 74.4 76.9 79.0 Central government debt, relative to GDP, % 52.4 51.4 53.1 54.5 56.7 58.5 image5.png image10.svg image14.emf -6 -4 -2 0 2 4 6 2005 2010 2015 2020 2025 Current account Balance of goods and services Sources: Statistics Finland, MoF Current account relative to GDP, % image15.emf -20 -15 -10 -5 0 5 10 2005 2010 2015 2020 Consumer confidence indicator Own economy now Own economy in 12 months’ time Sources: Statistics Finland Consumer confidence Deviation from average image16.emf 0 20 40 60 80 100 120 140 -2 0 2 4 6 8 2005 2010 2015 2020 2025 Saving ratio (left scale) Debt ratio (right scale) Household savings and debt Sources: Statistics Finland, MoF % of disposable income image17.emf 0 5 10 15 20 25 30 1990 1995 2000 2005 2010 2015 2020 2025 Construction Machinery and equipment R & D Investments relative to GDP, % Sources: Statistics Finland, MoF image18.emf -15 -10 -5 0 5 10 15 2005 2010 2015 2020 2025 Construction Machinery and equipment R & D Total Investments Sources: Statistics Finland, MoF change in volume and growth impact, % image19.emf 50 100 150 200 250 1990 1995 2000 2005 2010 2015 2020 2025 Manufacturing Services Primary production Construction Output Sources: Statistics Finland, MoF 1990 = 100 image20.emf -3 -2 -1 0 1 2 3 4 5 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 Total factor productivity Capital Labour Potential output growth Contributions to potential output growth Sources: Statistics Finland, MoF according to EU method, % image21.emf -3 -2 -1 0 1 2 3 4 5 2010 2015 2020 2025 Net exports Investment Private consumption Public consumption Change in inventories GDP Contribution to GDP growth in Finland percentage points Sources: Statistics Finland, MoF image22.emf -10 -8 -6 -4 -2 0 2 4 6 8 2005 2010 2015 2020 2025 Primary production Secondary production Services Total value added, change in volume Contribution to total output Sources: Statistics Finland, MoF percentage points image23.emf -20 -10 0 10 20 30 2015 2016 2017 2018 2019 2020 2021 2022 2023 Forest industry Metal industry excl. electrical and electronics industry Electrical and electronics industry Chemical industry Source: Statistics Finland Volume index for industrial production 3-month moving average, change yoy, % image24.emf -40 -20 0 20 40 60 80 2005 2010 2015 2020 Residential buildings Other than residential buildings Source: Statistics Finland Volume index for newbuilding change yoy, % image25.emf -30 -20 -10 0 10 20 -60 -40 -20 0 20 40 2005 2010 2015 2020 Confidence indicator for construction (left scale) Value added in construction, volume (right scale) Construction confidence and output Sources: Statistics Finland, European Commission seasonally adjusted balance and change yoy, % image26.emf 80 90 100 110 120 130 140 150 160 2015 2016 2017 2018 2019 2020 2021 2022 2023 Electrical and electronics industry Metal industry excl. electrical and electronics industry Chemical industry Forest industry Source: Statistics Finland Volume index for industrial production 2015 = 100, trend image27.emf -12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12 -50 -40 -30 -20 -10 0 10 20 30 40 50 2005 2010 2015 2020 Services confidence (left scale) Trend indicator of output, services (right scale) Sources: Statistics Finland, European Commission Service confidence and output change yoy, per cent and balance, 3-month image28.emf -8 -6 -4 -2 0 2 4 6 8 10 12 14 16 2005 2010 2015 2020 2025 China Euro area United States Gross domestic product Sources: Statistical authorities, MoF change in volume, % image29.emf 90 95 100 105 110 115 120 125 130 135 140 145 150 155 160 165 170 2015 2016 2017 2018 2019 2020 2021 2022 2023 Manufacturing Construction Trade Services Turnover trends in main industries Lähde: Tilastokeskus 2015 = 100, seasonally adjusted image30.emf 55 60 65 70 75 80 0 5 10 15 20 1990 1995 2000 2005 2010 2015 2020 2025 Unemployment rate (left scale) Employment rate 15-64 yrs (right scale) Employment rate, 20-64 yrs (right scale) Employment and unemployment Sources: Statistics Finland, MoF % Unemployment rate = Unemployed / Labour force (15–74 yrs) Employment rate = Employed / Population of working age image31.emf 96 100 104 108 112 116 120 124 128 132 136 140 144 2010 2015 2020 2025 Finland Sweden¹ Germany¹ Euro area¹ Unit labour costs Sources: European Commission, Statistics Finland, MoF 2010 = 100, nominal ¹ European Commission forecast image32.emf 0 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000 90 000 100 000 110 000 120 000 1990 1995 2000 2005 2010 2015 2020 Vacancies Source: MEAE seasonally adjusted image33.emf -24 -20 -16 -12 -8 -4 0 4 8 12 16 2005 2010 2015 2020 2025 World trade Finnish exports World trade Sources: CPB Netherlands Bureau for Economic Policy Analysis, Statistics Finland, MoF change in volume, % image34.emf -2 -1 0 1 2 3 4 5 6 7 8 9 10 2017 2018 2019 2020 2021 2022 2023 Food Energy Goods Owner-occupied housing Services Consumer price index percentage change and contribution to change Sources: Statistics Finland, MoF Consumer price index image35.emf -1 0 1 2 3 4 5 6 7 8 2005 2010 2015 2020 2025 Consumer price index Index of wage and salary earnings Consumer price index and index of wage and salary earnings Sources: Statistics Finland, MoF change yoy, % image36.emf 25 45 65 85 105 125 145 165 185 0 20 40 60 80 100 120 140 160 180 200 220 240 15 16 17 18 19 20 21 22 23 USD/barrel €/MWh Natural gas, near futures, euro area (left scale) Crude oil (Brent, global spot price, right scale) Sources: Intercontinental Exchange (ICE), Macrobond Raw material prices image37.emf 0 10 20 30 40 50 60 70 80 90 100 110 120 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 1990 1995 2000 2005 2010 2015 2020 2025 EUR bn (left scale) Relative to GDP, % (right scale) General government debt Sources: Statistics Finland, MoF image38.emf -6 -4 -2 0 2 4 6 2005 2010 2015 2020 2025 Total Central govt. Municipal govt.* Social security funds Wellbeing services counties General government financial balance Sources: Statistics Finland, MoF relative to GDP, % * Incl. wellbeing services county administration until the end of year 2022 image39.emf 35 40 45 50 55 60 65 70 1990 1995 2000 2005 2010 2015 2020 2025 Revenue Expenditure Tax revenue General government revenue, tax revenue and expenditure Sources: Statistics Finland, MoF relative to GDP, % image40.emf 0 10 20 30 40 50 60 70 80 90 2005 2010 2015 2020 2025 General govt. gross debt Central govt. debt relative to GDP, % General government debt Sources: Statistics Finland, MoF image41.emf -6 -4 -2 0 2 4 6 2005 2010 2015 2020 2025 Structural balance Nominal balance General government nominal and structural balance Sources: Statistics Finland, MoF relative to GDP, % Based on the European Commission's production function approach image42.emf -2 -1 0 1 2 3 2030 2035 2040 2045 2050 2055 2060 2065 2070 Pensions Health care Long-term care Education Unemployment Total The figure is compiled using the model developed by the Ministry of Social Affairs and Health for social expenditure analysis Change in age-related expenditure Source: MoF from year 2027, relative to GDP, % image43.emf -1 0 1 2 3 4 5 2005 2010 2015 2020 2025 Earnings-related pension schemes Other social security funds Total social security funds Social security funds, financial balance Sources: Statistics Finland, MoF relative to GDP, % image44.emf -14 -12 -10 -8 -6 -4 -2 0 2 4 2005 2010 2015 2020 2025 EUR bn Relative to GDP, % Central government financial balance Sources: Statistics Finland, MoF image45.emf 0 10 20 30 40 50 60 70 80 90 100 110 1990 1995 2000 2005 2010 2015 2020 2025 Revenue Expenditure Central government revenue and expenditure Sources: Statistics Finland, MoF EUR bn image46.emf 0 5 10 15 20 0 5 10 15 20 25 30 35 40 1990 1995 2000 2005 2010 2015 2020 2025 EUR bn (left scale) Relative to GDP, % (right scale) Municipal government debt Sources: Statistics Finland, MoF Incl. wellbeing services county administration until the end of year 2022 image47.emf -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 2005 2010 2015 2020 2025 Municipal government financial balance Sources: Statistics Finland, MoF relative to GDP, % Incl. wellbeing services county administration until the end of year 2022 image48.emf -5 -4 -3 -2 -1 0 1 2 3 4 5 -5 -4 -3 -2 -1 0 1 2 3 4 5 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Gross national product, growth % Source: Statistics Finland, MoF image49.emf -2 0 2 4 6 8 10 2020 2021 2022 2023 2024 2025 2026 2027 Russian invasion of Ukraine* (expenditrues related to the preparedness) Recovery and Resilience Facility (RRF) Temporary reduction in TyEL contributions Measures arising from the COVID-19 epidemic Other discretionary measures taken by the Government, net Discretionary measures taken by the Government EUR bn Source: MoF image50.emf 0 10 20 30 40 50 60 70 80 90 100 110 120 130 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 General government debt relative to GDP, % a) Improvement of EUR 9 bn. b) Improvement of EUR 4½ bn. Baseline Source: Statistic FInland, MoF image51.emf -6 -5 -4 -3 -2 -1 0 1 2 3 4 Cyclical impact Discretionary change (change in structural balance) One-off measures Change in general government budgetary position percentage points Source: MoF image52.emf -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 2019 2020 2021 2022 2023 2024 2025 Households' real disposable income change and contributions to growth, % Compensation of employees per work hour Hours worked Social benefits received Current taxes and net social contributions paid Mixed and property income, net Price index of private consumption Households' real disposable income Sources: Statistics Finland, MoF image53.emf 0 10 20 30 40 50 60 70 80 90 0 10 20 30 40 50 60 70 80 90 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 Dependency ratio (aged 0 to 14 and over 65 years) Old-age dependency ratio (aged 65 and over) Dependency ratio persons per hundred persons of working age Source: Statistics Finland, MoF image54.emf 0 10 20 30 40 50 60 70 0 10 20 30 40 50 60 70 0 4 8 1 2 1 6 2 0 2 4 2 8 3 2 3 6 4 0 4 4 4 8 5 2 5 6 6 0 6 4 6 8 7 2 7 6 8 0 8 4 8 8 9 2 9 6 1 0 0 + Health care Long-term care Education Unemployment Pensions Age-related expenditure by age category in 2019 thousand EUR per capita, average Source: SOME model developed by the Ministry of Social Affairs and Health, MoF image9.png image15.svg image1.png image2.svg