Finland has been a member of the European Union since 1995. At the time of the outbreak of Russia’s war in Ukraine, the country also applied for membership in NATO. All NATO members later approved this, so on April 4, 2023, Finland officially joined the NATO Alliance.
The longest EU Border with Russia
Comprehensive social benefits, a functioning democracy, and a high degree of autonomy contribute to the economic development of countries. However, due to the current geopolitical changes, the economy suffered. With a length of 1340 kilometres, the country has the longest border of any EU Member State with Russia. This situation reflects Finnish economic growth in general, which is currently estimated to reach a GDP growth rate of 1.9 percent in 2022. For 2023, an even lower GDP growth rate of 0.3% is expected. The curve is not expected to go up again until 2024, with growth of 1.7%.
Important Forestry
In Europe’s most forested country, wood has always been the most important raw material. And the timber and paper industries, despite modern technology, are still an important part of the Finnish economy. In total, 78% of Finland’s land area (23 million hectares) is forested, and 61% of the Finnish forest is privately owned. The forest area averages 30.3 hectares. Every year, 55 million cubic metres of forest are deforested for industrial use.
It is therefore no wonder that Finnish companies are among the largest forestry companies in the world. Forestry accounted for 18% of the total value of Finnish goods exports. The value of exported forest products is estimated at 14.6 billion Euros in 2022. The largest exports from Finland are refined oil, caolin-coated paper, and vehicles, followed by sawwood and flat-rolled stainless steel.
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Finland’s foreign trade balance has a small surplus. Germany is the most important trading partner, with a share of 14.9% of imports and 13.5% of exports, followed by Sweden with 11.2% (10.7%), and Russia with 11.2% (5.7%).
Young Entrepreneurs supported
The Finnish Government also supports young entrepreneurs who want to become part of the economic cycle. Every year, 400 new companies receive start-up capital of 50.000 Euros each through the state-owned business funding programme “Business Finland”. In the Helsinki-Espoo region alone, 1000 new high-tech enterprises have grown in recent years.
Potential founders receive support from the national investment company Tesi and the Finnish Technical Research Centre (VTT). Tesi cooperates with venture capital companies and in 2018 invested a total of EUR 121 million Euros in start-ups worth EUR 1.2 billion. In contrast, VTT cooperates with scientists with the support of the Ministry of Economic Affairs.
Even though Finland’s economic growth has recently stagnated or even declined, it is expected that the country will retain its economic strength. This is mainly due to the fact that Finland has invested a great deal in development, training, and support for the younger generation.
