Gross domestic product fell by 1.0 per cent in 2023

Households hit by rising interest rates – support from growth in pensions paid and good employment

Actual interest rates paid by households grew by EUR 3.7 billion from 2022. Actual interest rates received by households grew by EUR one billion from the previous year.

The VAT reduction on electricity and assistance with electricity costs had a positive effect on households' savings, even though as a whole households' saving rate was slightly negative.

Households’ saving rate was -0.4 per cent. In 2022, households’ saving rate was -1.2 per cent. Households' saving rate is calculated as the ratio between savings and disposable income.

Households' income grew due to a five per cent growth in wages and salaries and an eight per cent rise in pensions from the year before.

According to preliminary data, private consumption expenditure grew by five per cent in 2023. The volume of private consumption expenditure also grew slightly.

General government deficit grew to over EUR seven billion — central government and local government clearly in deficit

The financial position, or net lending, of general government showed a deficit of EUR 7.0 billion in 2023. In the previous year, the deficit was EUR 1.4 billion. The growth in deficit was affected, for example, by decreased accruals of value added tax and other taxes on products, growth in wages and salaries paid, and expenditure related to wellbeing services counties.

In 2023, the deficit was 2.5 per cent relative to GDP.

The deficit of central government was EUR 8.2 billion, while one year before it was EUR 4.2 billion. This was affected, for example, by a drop in tax accrual, rising wages and salaries paid and current transfers to wellbeing services counties.

Interest rates paid by central government grew faster than interest rates received. Compared to the previous year, the difference between interest income and expenditure, or net interest expenses, grew by EUR 0.3 billion.

In national accounts, payment flows resulting from swap arrangements of central government debt interests are not recorded in interests. Interest expenses on central government debt before swaps grew more slowly than after swaps. In total, general government interests received grew slightly more than interests paid, which is caused by an increase in the interest rates received by employment pension schemes.

The deficit of local government, excluding wellbeing services counties, grew from the previous year, being EUR 1.3 billion. The deficit of wellbeing services counties included in the annual national accounts for the first time was EUR 1.6 billion. A non-recurring compensation of EUR 0.5 billion paid to wellbeing services counties in January 2024, adjusting the funding for 2023, was recorded as revenue for wellbeing services counties and as expenditure for central government for the statistical reference year 2023.

The decrease in the accrual of value added tax was affected by the temporary reductions in the value added tax on electricity in force last year. The fall in other taxes on products was especially explained by a drop in the accrual of asset transfer taxes. This was caused, for example, by a decrease in dwelling transactions. The group of other taxes on products consists of several taxes. The accrual of motor vehicle tax also diminished.

The financial position of employment pension schemes improved from one year back, being EUR 3.0 billion in surplus. The surplus does not include value changes in investments.

The financial position of other social security funds improved, being good EUR 1.1 billion in surplus. This was primarily due to increased social security contributions received. Proportion of health insurance contributions levied on compensation of employees was raised from the previous year. Growth was also due to increased compensation of employees.

Current account deficit contracted from the previous year in 2023

The current account showed a deficit of EUR four billion in 2023 (EUR -6.5 billion in 2022).

Net exports of services weakened from the previous year. The fall was particularly explained by weak development in telecommunication, computer and information services and increased foreign travel of Finns recorded as travel imports. The goods account improved as the value of energy imports fell. The surplus of the trade account grew more than the fall in net exports of services and thus the deficit of the current account contracted from the record level of the previous year. However, the current account was burdened by a stronger growth in property expenditure paid abroad than in property income due to interest expenditure.

Revision of quarterly national accounts

Taxes on products in 2023 have been corrected downwards from the February data due to technical errors that affected the calculation of February.

The indicator of private consumption was revised and the current priced level of private consumption grew from the February round. At the same time, the volume of private consumption became revised upwards.

Government consumption expenditure and public investments were revised from February. The value added of general government was also specified. These were caused by revisions of data particularly in central and local government. The available source data are less extensive when compiling quarterly national accounts than when compiling annual national accounts. Quarterly data are compiled with the indicator method, where the coverage of the data is corrected by extrapolation. In 2023, there was an exceptional uncertainty in the compilation of statistics due to the launch of wellbeing services counties.