Finnish economy trying to find its lost grip

The world economy offers in many ways a helping hand to Finland. The global recovery is well underway, the euro is weaker now, and both interest rates and the price of crude oil are record low. Unfortunately, the Finnish economy does not get a decent grip of that friendly hand. Therefore, the engines of economic growth are largely missing and the outlook for the next couple of years remains weak.

Finland have been waiting for a long time for exports to finally pick up. Against all expectations that has not happened, and gradually we begin to understand why not. The current global recovery, unlike the previous ones, is fuelled by consumption and not by the rise of world trade, the industrial sector and its investment, states Nordea Bank.

Under these circumstances the structure of Finnish goods exports is unfavourable. Half of goods exports consist of all kinds of intermediate goods and another 30% of investment goods. The demand for these items picks up only following an industrial recovery in Europe and the subsequent rise in investment.

From the Finnish perspective, the euro has weakened only relative to a small number of key currencies and appreciated against some of them. The net effect on exports is probably negligible, says Nordea Bank.