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Successfully investing in Finland

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last updated on 19 May 2021 | reading time approx. 4 minutes

 

 

 

How do you assess the current economic situation in Finland?

Covid-19 has had an impact on the entire world’s economy, and Finland is no exception. In 2020, Finland’s gross domestic product (GDP) decreased by about 2.8 per cent. Even though the economy slowed down, Finland has fared well during the crisis: the average decrease in GDP in the Eurozone was 6.6 per cent. In 2021, with vaccinations well underway and the end of Covid-19 as we know it in sight, the GDP in Finland is expected to increase by 2.5 per cent in 2021 and this economic growth is expected to continue into 2022 and 2023.

Finland continues to offer a stable, continuous and predictable business environment. Mostly as a result of Covid-19, household consumption has decreased in line with employment rates. This trend has been the strongest in the restaurant and hospitality industry. In addition, the building boom has been continuing to slow down and exports are weakening. The government has aided businesses and invested into the economy in order to help the economy stay healthy during the pandemic. Even though GDP has decreased, and a number of businesses have inevitably been struggling in this exceptional situation, the government has been able to place Finland among those countries that have suffered the least amount of damage to their economy due to the pandemic.
 
From the global perspective, Finland is also one of the most digitised countries in the world, and it has a highly industrialised, knowledge-based economy that is open to globalisation and investment. Finland ranked in first place in last year’s DESI (“The Digital Economy and Society Index” – DESI) comparison of digitalisation. Finland excels in digital public services and the integration of digital technologies. The country’s high competence level is one of Finland's strongest competitive advantages: 76 per cent of the population have at least basic digital skills, which is a long way above the EU average (57 per cent).

Both the Finnish economy and government are stable and predictable, and companies and citizens alike have great confidence in both.
 

How would you describe the investment climate in Finland? Which sectors offer the largest potential?

The general sentiment in business and industry reflects uncertainty but also hope for the future in a world that is returning to normalcy. Growth of up to 2,5 per cent is expected by the end the year. However, the shortage of skilled employees and competence in sectors such as ICT and the software industry is holding back growth.
 
Finland has significant growth potential in many sectors and specialised niches, including the bioeconomy, circular economy, the food sector, diagnostics and photonics. The growth will also continue in mining and exploration, while joint development projects are under way involving several themes such as the battery cluster, the environmental impact of mines, development work on a test enrichment facility for the Geological Survey of Finland, and research into geoenergy and peat.
 
This year, Finland's third largest forest industry company, Metsä Group, is investing around 1.6 billion Euro in a new pulp mill in Kemi in northern Finland. This is the largest investment ever made by the national forestry industry. The previous record is also held by the Metsä Group - its production plant in Äänekoski went into operation in 2017, costing around 1.2 billion Euro. In addition, over 1 billion Euro will be invested in Finnish ports during this and the upcoming few years.
 

What challenges do German companies face during their business ventures into Finland?

Finnish licensing and certification requirements differ from those in other European countries. For this reason, it makes sense to take advantage of advisory services to meet domestic legal and regulatory requirements on site. This enables a smooth entry into the Finnish market. For many, the Finnish language could also be a real challenge. However, Finland is a very international country, where one can also fare well with English, Swedish or even German and Russian.
 

Finland's economy seems to remain stable in the face of the Corona-related crisis. What does this mean for German investors?

Finland has taken significant measures during the past year in order to prevent the spread of the pandemic and to secure a healthy economy. Green technology, digitalisation and education will be receiving investments from EU, and these industries are expected to be strong in the following years. Start-ups, especially in the technology industry including games and entertainment, remain as strong as ever.

 

In your opinion, how will Finland develop?

International companies and investors will continue to benefit from Finland’s well-structured economy, which is fairly easy to navigate, and offers one of the lowest corporate tax rates in Europe (20 per cent), as well as an educated workforce.  

The rate of the vaccinations is considered to be the biggest single factor in Finland’s economic recovery from the pandemic. Economists are cautiously predicting economic growth of 2.5 per cent, provided there will be no unexpected turns for the worse in the development of the pandemic or the vaccination rate. Even though the economy is expected to recover well, it will not be unchanged. Remote work and further digitalisation of work are permanent changes that will directly impact the economy and business, and e-commerce in particular.

Finland will focus on building relationships with dynamic Asian economies in the next few years. Transport connections to these countries are being expanded, as are economic contacts.

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