Gross domestic product grew by 3.6 per cent last year

14.7.2005

According to Statistics Finland's revised preliminary data, the volume of Finland's GDP grew by 3.6 per cent last year. The initial preliminary data published in February put the rate of growth at 3.7 per cent. The growth of GDP accelerated last year from the more modest figures of the three previous years Last year's GDP was EUR 150 billion.

Faster growth of manufacturing

The volume of primary production contracted by 1.7 per cent last year from the previous year. Agricultural output declined by 2.8 per cent especially because crops suffered from the poor weather conditions. In forestry, production contracted by just under one per cent.

In the industries of secondary production, output grew faster last year and was nearly five per cent higher than in the year before. The volume of value added in manufacturing grew by 5.9 per cent. In the wood and paper industry, output went up by 5.4 per cent. Output in the metal industry increased by 7.8 per cent, as the manufacture of electronic and electrical products grew by over 13 per cent. By contrast, the manufacture of transport equipment declined by close on 11 per cent.

The volume of value added in building construction went up by three per cent. Residential building increased by nine per cent, whereas other building construction decreased slightly. Output in civil engineering went up by 1.5 per cent.

Output increased by 4.2 per cent in private services and by 0.5 per cent in public services last year. Trade went up by nearly seven per cent. Hotel and restaurant activities remained on level with the year before.

The volume of transport and communications grew by 5.4 pr cent last year, with nearly 11 per cent growth in telecommunications. The growth in other services was more moderate. Financial intermediation and insurance activities increased by 1.7 per cent and business activities by 2.5 per cent. Educational services increased by one per cent, and health and social services by two per cent.

Demand for investments grew

Demand was supported last year by investments which grew by five per cent having contracted for two years prior this. Big increases were recorded in investments in machinery, equipment and transport equipment, around eight per cent, and residential buildings, 7.4 per cent. Private investments increased by 5.6 per cent but public investments by only 2.1 per cent. The rate of investment in the national economy went up slightly and was 18.8 per cent. Investments went up especially in transport, but manufacturing also increased its investments.

Private final consumption expenditure increased by 3.2 per cent last year. Purchases of durable consumer goods increased by close on seven per cent, even though purchases of motor cars declined. Expenditure on semi-durable goods, such as clothing, increased by just short of five per cent. Government consumption expenditure went up by 1.6 per cent.

The volume of exports grew by 5.6 per cent and that of imports by six per cent. The balance in goods and services still showed a clear surplus, although slightly diminished from the previous year.

Slight improvement in employment

According to national accounts, both the number of employed persons and that of hours worked went up by 0.3 per cent last year. Jobs decreased most in manufacturing and increased most in business activities, and health and social services.

The productivity of labour grew last year by 4,1 per cent in the private sector and by 3,3 per cent in the total economy.

According to Statistics Finland's labour force statistics, the rate of unemployment was 8.8 per cent, having been 9.0 per cent in the year before. The average number of unemployed persons was 229,000 last year. The rate of employment was 67.2 per cent, as against 67.3 per cent in the previous year.

Price level remained stable

The economy's overall price level is estimated to have risen by 0.5 per cent last year as measured by the GDP price index.

The year-on-year rise in the consumer price index was 0.2 per cent. The prices of private consumption also went up by this much.

The terms of trade weakened by 2.6 per cent, as export prices rose by one per cent and import prices by 3.6 per cent. Export and import prices in the national accounts differ from the prices that are used in Statistics Finland's export and import price indices due to, inter alia, the annual industry weight structure that is used in the calculations.

National income per capita grew

Net national income grew by five per cent in nominal terms last year, and was EUR 23,949 per capita, which is over EUR 1,000 more than in 2003. Finland's gross national income last year was EUR 149 billion, having grown by 3.1 per cent in real terms.

Finnish households' wages and salaries went up by 4.5 per cent, and employers' social insurance contributions grew by equally much. Compensations of employees rose to 58.9 per cent of the national income. The corresponding share in the previous year was 59.2 per cent. The share of property and entrepreneurial income of the national income was 25.8 per cent, as against 25.4 per cent in the year before.

Enterprises' investments grew

Enterprises' operating surplus, or operating profit, went up by nearly five per cent from the year before. Their entrepreneurial income increased by good 16 per cent from 2003. Entrepreneurial income also takes into consideration property income and paid interest, and roughly corresponds with profit before payment of taxes and dividends.

Enterprises paid 10.8 per cent more direct taxes and 16 per cent more dividends last year than in the year before.

Enterprises' fixed investments grew by eight per cent last year. Enterprises' net lending totalled good EUR 6 billion.

Financial position of financial institutions showed deficit

The net interest income of financial institutions (financial intermediation services indirectly measured) grew by 9.1 per cent. The credit stock increased but the level of interest rates declined further, albeit more moderately than in 2003. The financial position of financial institutions showed a deficit of nearly EUR 1 billion. The reasons for this were dividends and unretained earnings from direct foreign investments in Finland, which are regarded as income of the foreign owners and deducted from the sector's income. Financial institutions paid a record amount of EUR 2.5 billion in dividends, which is over EUR 1.2 billion more than in the year before.

General government surplus under EUR three billion

The financial position of central government continued to show a slight surplus of EUR 364 million last year. The surplus has been contracting annually since the year 2000 when it was EUR 4.4 billion.

State revenues from indirect taxes grew by just short of four per cent and those from direct taxed by good four per cent. Both income and corporate tax revenues went up. Income transfers to local government went up by nine per cent, those to social security funds by 3.8 per cent and those to the rest of the world by five per cent.

Final consumption expenditure grew by just under four per cent in nominal terms and remained unchanged in real terms. Investments grew by nearly four per cent, especially in the rail network.

The financial position of local government weakened further and showed a deficit of EUR 1 billion. Tax revenues received by municipalities increased by just short of two per cent. Revenues from local tax went up by one per cent and those from corporate tax by close on 10 per cent from 2003. Final consumption expenditure grew by six per cent in nominal terms and by good two per cent in real terms. Investments diminished by just under one per cent.

The financial position of both employment pension funds and other social security funds weakened from the year before. Paid compensations grew by nearly five per cent. The premium income of employment pension funds went up by close on five per cent and that of other social security funds by three per cent. The financial surplus of employment pension funds was EUR 3.8 billion and the deficit of other social security funds amounted to EUR 0.4 billion.

The total financial position, or net lending, of general government showed a surplus of EUR 2.8 billion, or 1,9 per cent of GDP. In the previous year, the surplus was 2,3 per cent of GDP.

Public expenditure grew

The proportion of public expenditure (excluding internal transfers) of GDP rose to 51.1 per cent, having been 50.9 per cent in the previous year.

The tax rate, or the proportion of taxes and statutory social security contributions of GDP, fell last year to 44.3 per cent from the previous year's 44.6 per cent.

Households' real income grew by 5.4 per cent

The disposable income of households increased by 5.5 per cent in nominal terms and by 5.4 per cent in real terms last year. The income was increased by growth in earnings, dividend income and social security benefits, as well as by lowered direct taxation.

Primary income grew chiefly as a result of the wage sum growth of 4.5 per cent. Households' gross income also increased because their dividend income grew by a quarter and the social security benefits they received went up by 4.1 per cent. Occupational pensions accounted for most of the increase in received social security benefits.

Direct taxes paid grew by 1.8 per cent, i.e. by less than primary income and social security benefits, so lightened taxation also increased households' income. Neither profits on sales nor incentive share options are recorded as income in national accounts, but taxes paid on such profits or options are recorded as taxes. Income from share options is estimated to have totalled slightly less than in the previous year.

Households' entrepreneurial income grew by two per cent in nominal terms. The growth came from increases of 3.1 per cent in imputed income from owner-occupied dwellings and 5.2 per cent in other entrepreneurial income, for entrepreneurial income fell by 6.5 per cent from agriculture and by 3.6 per cent from forestry.

In nominal terms, the final consumption expenditure of households grew by less than in previous years, of by 3.2 per cent. This is clearly less than the growth in their disposable income, so the savings rate, that is, the proportion of savings relative to disposable income, rose to 2.8 per cent from the previous year's 0.6 per cent. Households' indebtedness increased by five percentage points for the second year running and was 79.1 per cent. The indebtedness rate expresses the ratio between the end-of-year credit stock relative to annual disposable income.

Households' fixed investments increased by 10.6 per cent mainly due to growth in investments in dwellings. The financial position of households improved distinctly but continued to show a deficit of EUR 0.7 billion.

Changes in methods

FISIM-allocation has been included in the figures. Impact on the total value of GDP in 2004 was +0.5 %. See Methodological descriptions.

Next revision in January 2006

National accounts data for 2003 and 2004 will next be revised at the end of January 2006. The data for 2003 will then become final.


Last updated 14.7.2005

Viittausohje:

Suomen virallinen tilasto (SVT): Annual national accounts [verkkojulkaisu].
ISSN=1798-0623. 2004, Gross domestic product grew by 3.6 per cent last year . Helsinki: Statistics Finland [viitattu: 17.10.2019].
Saantitapa: http://www.stat.fi/til/vtp/2004/vtp_2004_2005-07-14_kat_002_en.html