Finland's economy has struggled since 2008. This is partly due to the fact that the global crisis at that time was preceded by Nokia's success as a mobile phone manufacturer, which led to an expansion of the public sector in hopes of scoring political points.
Then Nokia's glory days came to an end, and Finland was left with an oversized and expensive public sector relative to its income. However, dismantling it proved nearly impossible for the ruling politicians, as almost the entire population benefited from it.
The current Finnish government has started to address this problem, but the recent rise in interest rates has made the situation more difficult by increasing state expenditures just as public sector spending has been reduced. At the same time, the country's labor unions have opposed all changes, and the private sector hasn't recovered as hoped after the COVID-19 pandemic.
However, according to Finland's Ministry of Finance, there now seems to be light at the end of the tunnel. According to its top official, "price increases have clearly slowed down. Interest rates are on the decline, and the ECB is likely to lower rates two more times this year, which the markets have already priced in. The decline in GDP appears to have genuinely stopped, and there are signs of a revival in the housing market."
The official also praises Finland's "excellent" cost competitiveness, meaning the ability to produce goods and services at competitive prices compared to other countries. Additionally, alongside Nokia and the forest products industry, "new beginnings" have emerged in sectors like clean energy, artificial intelligence, and chip technology.
When you add to all this that the country has a right-wing government, which can be expected to refrain from redistribution policies, it seems that Finland is also emerging from its decade-and-a-half-long economic downturn.
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