Volume of gross domestic product decreased by 1.2 per cent in 2023

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Gross domestic product, or the value of goods and services produced in the national economy, was EUR 273 billion in 2023. In 2023, output and investments in construction decreased from the previous year. A corresponding decline in residential building was last experienced during the financial crisis. The industry-specific changes were described in more detail in connection with the summer release.

In 2023, the current account was EUR 1.1 billion in deficit (3.0 in June). The revision of the current account deficit was on the one hand impacted by the growth in travel exports related to the time series revision, and on the other hand by new data on investment income.

Compared to the data published in June, the value of gross domestic product decreased by EUR 1.6 billion in 2023 and around EUR one to two billion per year during 2014 to 2023. The decline in gross domestic product is connected to new estimates of the size of the shadow economy and the intermediate consumption of non-financial corporations. Time series revisions of national accounts are carried out regularly at five-year intervals as in the other EU countries. They help maintain the timeliness and international comparability of the national accounts.

The time series revision is described in more detail below.

Time series of national accounts were revised

Statistics Finland published revised time series of national accounts and balance of payments statistics on 18 September 2024. As a result of the time series revision, the figures were revised starting from 2010. The database tables of the quarterly national accounts were also updated. Financial accounts data will be published on 30 September 2024.

Level of gross domestic product was revised downwards

As a result of the time series revision, the level of GDP fell by EUR one to two billion per year in 2014 to 2023. The levels for 2010 to 2013 were also updated, but the changes were smaller.

Revisions to the change percentage of GDP volume were moderate in the time series revision. Typically, both the calculation year and the comparison year are revised in the same direction. In 2023, the volume of gross domestic product decreased by 1.2 per cent compared to 2022.

Revisions to GDP also impact the total tax ratio. The impact on the tax ratio is presented in the release of the statistics on taxes and tax-like payments.

Several methodological changes impacting value added and GDP

In a classification change related to international cooperation, items previously recorded as non-financial corporations’ expenditure were moved to investments. Recordings related to daily allowances paid by non-financial corporations were also moved from intermediate consumption to compensation of employees in accordance with the guidelines of Eurostat, the Statistical Office of the European Union.

In addition, the share of the shadow economy in Finland's economy has been re-estimated. According to the new estimates, the share of the shadow economy in Finland's economy is smaller than previously estimated. The Tax Administration’s studies on the size of the shadow economy published in recent years impacted the new estimate.

Private consumption and exports were revised

Gross domestic product can be calculated through value added and, on the other hand, through the demand items of the economy. Demand items include exports, investments and consumption. The time series revision brings changes to private consumption, exports and investments.

Households' consumption expenditure was revised to a significantly lower level than before the time series revision. There are several reasons for this. The present level of private consumption is closer to the data of the Household Budget Survey than before. In addition, we have reclassified which share of private consumption is consumption of households resident in Finland and which is service exports.

Visit Finland’s Border Survey, which started in 2023 and especially measures the spending by foreign visitors in Finland, was introduced as a source for travel exports. Previously, the data were based on the Border Interview Survey (ended in 2012) produced by Statistics Finland, the change in overnight stays by non-resident tourists in the accommodation statistics and other sources. There is a clear quality difference between these sources and the time series of the travel accounts has been revised retrospectively to bridge this gap.

We have also made more extensive use of sales data from stores than before.

Significant changes to the sector accounts

As a result of the time series revision, significant changes were found in the sector-specific ratios of the national economy, such as households' savings and saving rate. For households, this is particularly explained by the decrease of private consumption. Households' savings grew from the level prior to the time series revision.

In the non-financial corporations sector, the change in ratios was opposite to that of households. Non-financial corporations' net lending weakened and that of households improved. In the non-financial corporations sector, the change in ratios is explained by a drop in value added generated by non-financial corporations.

The changes in the current account were particularly affected by the adjustment of service exports. As exports of services grow, the balance of goods and services and the current account strengthens.

There are big annual differences in the adjustment of travel exports. The travel restrictions during the COVID-19 period lowered travel exports and the effect of the time series revision was hundreds of millions. After COVID-19, the annual impact of the adjustment has been slightly over EUR one billion.

Classification of real estate taxes updated

The classification of real estate taxes has been updated to improve international comparability. In future, real estate taxes are part of taxes paid on production and thus impact, for example, the operating surplus of the sectors.

Changes to the industrial classification of general government finances

For general government, items caused by intra-general government trade were removed. This has a significant effect on the output and intermediate consumption of local government industries but not on value added. At the same time, the industrial classification was revised so that items in the category of general administration services were divided into more accurate industries.

After the change, the processing of internal items follows the international guidelines of national accounts better than before.

Level of investments increased

In recent years, the total level of investments increased by around EUR one billion as a result of the time series revision. The growth is explained by classification changes related to R&D investments. Due to the changes, we now comply with international guidelines more closely than before.

New data became available regarding investments in civil engineering, which increased investments from 2010 to 2018.

In addition, investments in transport equipment have been added to the years 2017 to 2023 based on data on first registrations and taxable values of vehicles.

Building investments were revised downwards because the shadow output of construction was corrected downwards.

Breaks in the time series

Due to the methodological revision, particular attention should be paid to the comparability of data on wages and salaries and taxes when using the statistics. Changes related to these have been extended until 2010, that is, there is a break in the time series between 2009 and 2010.

For local government, the procedure where internal items have been removed has been applied starting from 2015.

The introduction of wellbeing services counties in 2023 brought significant changes to the items of central and local government. This complicates the comparability of general government data between 2022 and 2023.

Time series revisions improve the comparability of EU country data

Time series revisions are carried out in all EU countries at five-year intervals in a jointly selected year. They help maintain the timeliness and international comparability of the national accounts. 

A majority of the changes to be made in 2024 are connected to international cooperation that aims to harmonise the calculation of the gross national income and steers general government compilation requirements in EU countries (Data revision - Eurostat (europa.eu)). National needs for changes are also included.

National Accounts' table package

The table package combining national accounts data is available in PDF/A format in Finnish and English. The table package is updated in connection with each annual national accounts release.