Finnish Economy TodayDr. Kari Jalas, Director General

The Central Chamber of Commerce of Finland

May 7, 2007

Business Council of Manitoba

Global Competitiveness Index by World Economic ForumGCI GCI GCI

Country/Economy 2006 Rank 2006 Score 2005 Rank Changes 2005-2006

Switzerland 1 5,81 4 3

Finland 2 5,76 2 0

Sweden 3 5,74 7 4

Denmark 4 5,70 3 -1

Singapore 5 5,63 5 0

United States 6 5,61 1 -5

Japan 7 5,60 10 3

Germany 8 5,58 6 -2

Netherlands 9 5,56 11 2

United Kingdom 10 5,54 9 -1

Hong Kong SAR 11 5,46 14 3

Norway 12 5,42 17 5

Taiwan, China 13 5,41 8 -5

Iceland 14 5,40 16 2

Israel 15 5,38 23 8

Canada 16 5,37 13 -3

Austria 17 5,32 15 -2

France 18 5,31 12 -6

Australia 19 5,29 18 -1

Belgium 20 5,27 20 0

Estonia 25 5,12 26 1

Latvia 36 4,57 39 3

Lithuania 40 4,53 34 -6

Hungary 41 4,52 35 -6

Poland 48 4,30 43 -5

Russian Federation 62 4,08 53 -9

Competitiveness and GDP per capita

Source: ETLA/The Central Chamber of Commerce of Finland

0

10000

20000

30000

40000

50000

60000

1 2 3 4 5 6 7

CGI year 2003 (WEF)

GD

P p

er

ca

pit

a

Competitiveness factors

Source: IMD World Competitiveness Yearbook 2006

0

20

40

60

80

100Economic Performance

Government Efficiency

Business Efficiency

Infrastructure

FIN

USA

CAN

GDP per capita

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 20050

5

10

15

20

25Thousands (Geary-Khami 1990 $)

Finland Sweden USSR Russian Federation

Source: Groningen Growth and Development Centre and the Conference Board, January 2007

GDP per capita 2006purchasing power parities

Source: IMF 4/2007

LuxembourgIreland

Norw aySw itzerland

DenmarkAustria

CanadaNetherlands

FinlandBelgiumSw eden

JapanGermany

ItalyFranceCyprus

SpainGreece

SloveniaPortugal

MaltaHungaryEstonia

Slovak RepublicLithuania

LatviaPolandRussia

BrazilChinaIndia

0 20 40 60 80 100

thousand int. dollar

Export structure of Finland, % of total exports

Source: Finnish Customs, 2007

15,0 15,0 15,0 10,0 13,2 14,2

1,0 4,011,0

8,8 7,06,9 6,7

15,0 6,0

7,0

8,5 9,012,8 14,42,0

4,011,0

31,028,0 24,7

17,0

18,024,0

16,018,3 19,3

42,0

40,030,0

31,0

22,016,0 16,227,0

16,0 15,08,0 5,0 4,8 4,5

8,80

10

20

30

40

50

60

70

80

90

100

1960 1970 1980 1990 2000 2005 2006

Wood and wood products

Pulp, paper and paperproductsMachinery and equipment,transport equipmentElectrical and opticalequipmentBasic metals and fabricatedmetal productsChemicals and chemicalproductsOther products

Components of per capita GDP growth

=GDP GDP hours worked

population hours worked population*

Components of living standard in Finland 1954-2004

Source: Prof. Matti Pohjola (2005)

1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 20040

1

2

3

4

5

6Index, 1954=1

GDP per capita

GDP per hours worked

Hours worked per capita

Finnish economic wellfare has increased by a multiplier of 4.3 and labour productivity by a multiplier of 5.5, whereas hours worked have diminished 23 %.

ccc/jk 11/2006

Projected changes in old-age dependancy ratio*

Change2003 2025 2050 2003-2025

Denmark 22 34 42 12Sweden 26 36 41 10Germany 26 38 52 12France 25 37 46 12FINLAND 23 41 47 18EU15 25 36 52 11

Source: European Commission, Special Report 1/2006

* population aged 65 and above as a percentage of the population aged 15-64

Employment rate

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 201050

60

70

80

%

70%/2003 Lipponen II

72%/2011 Vanhanen II

75%/2011 Vanhanen I

MoF forecast 2008: 69,7%

Source: MOF 3/2007, Government Programmes, Statistics Finland

Labour productivity growth Volume indices

Source: EU KLEMS Database, March 2007, http://www.euklems.net

1980 1983 1986 1989 1992 1995 1998 2001 20040

50

100

150

200

250

300

3501995=100

Total industries

Electrical machinery, post and communication services

Labour productivity growth in Finland

Source:OECD Productivity Database, September 2006.

1970-1980 1980-1990 1990-1995 1995-2000 2000-20050

1

2

3

4

5%

Level of labour productivity in manufacturing industries in 2003*

*measured in 1997 $

Source: University of Groningen, Etla

Value added per hour worked Level of productivity

Finland OECD average Finland/OECDManufacture of chemical products 61,7 68,3 -9,6Manufacture of rubber and plastic prooducts 38,5 41,9 -8,1Manufacture of textiles and and textile products 21,6 21,5 0,8Manufacture of machinery and equipment 31,2 30,7 1,7Manufacture of metals 37,6 36,1 4,1Manufacture of food products and beverages 35,4 33,8 4,6Manufacture of basic metals 60,8 43,1 41,1Manufacture of wood and wood products 41,1 26,0 58,4Manufacture of pulp, paper and paper products 83,8 49,7 68,5Manufacture of electronic and electrical products 75,9 32,6 132,4