Core Views Over the short term, we believe that Finland's fiscal situation remains one of the most robust in Europe, and do not expect it to suffer from a ratings downgrade in the near future, expecting it to remain one of just four remaining countries in the eurozone to be awarded AAA status from all three major ratings agencies. However, over a longer time horizon, looming structural challenges pose a threat to public debt dynamics and may impede fiscal flexibility. Several key sectors, including forestry and papermaking, shipbuilding and telecommunications remain in terminal decline, while high labour costs are acting as a deterrent for investment and importers of Finnish goods, despite strong structural competitiveness. This has cast doubt over the government's ability to sustainably increase aggregate demand through fiscal stimulus.
Major Forecast Changes No major forecast changes this quarter.
Table Of Contents
Finland Business Forecast Report Q4 2014 Executive Summary.... 5 Core Views..5 Chapter 1: Political Outlook.. 7 SWOT Analysis.... 7 BMI Political Risk Ratings. 7 Domestic Politics 8 NATO Membership Still Unlikely..8 The appointment of Alexander Stubb as Finland's prime minister in June will not mark a major shift in economic policy. Despite being pro-NATO membership, we do not expect Finland to join the alliance in the foreseeable future. table: Political Overview....8 Chapter 2: Economic Outlook.. 11 SWOT Analysis.. 11 BMI Economic Risk Ratings. 11 Economic Activity.. 12 Struggling To Find Growth Drivers.12 While we are forecasting Finland to exit recession in 2014, the recovery will be tepid and risks remain weighted to the downside. The economy is undergoing a major industrial restructuring, and long-term growth potential is likely to be significantly lower than pre-crisis levels. table: GDP By Expenditure.12 Chapter 3: Key Sectors.. 15 Pharmaceuticals and Healthcare.. 15 table: Government Healthcare Expenditure Trends, Historical Data And Forecasts... 16 table: Pharmaceutical Sales, Historical Data And Forecasts16 table: Private Healthcare Expenditure Trends, Historical Data And Forecasts .. 17 table: Healthcare Expenditure Trends, Historical Data And Forecasts 17 Other Key Sectors.. 19 table: Telecoms Sector Key Indicators....19 table: Defence and Security Sector Key Indicators....19 table: Infrastructure Sector Key Indicators.19 TABLE: Autos Sector Key Indicators.20 Chapter 4: BMI Global Assumptions. 21 Global Outlook... 21 Global Recovery Still On Track..21 Table: Global Assumptions....21 Table: Developed States, Real GDP GrowtH, %.22 Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %.. 22 Table: Emerging Markets, Real GDP Growth, %23