Home > Statistics > Annual national accounts > 2017 > 1. Gross domestic product grew by 2.8 per cent last year

1. Gross domestic product grew by 2.8 per cent last year

Corrected on 12 July 2018 at 14:00. The corrections are indicated in red.

According to Statistics Finland's revised preliminary data, the volume of Finland’s GDP increased by 2.8 per cent in 2017. The initial preliminary data released in March put the rate of growth at 2.6 per cent. Finland's national economy grew for the second year in a row after four years of downturn. The national accounts for 2016 were also revised, the volume of GDP grew slightly more than had been estimated previously.

Figure 1. Annual change in the volume of gross domestic product, per cent

Gross domestic product, or the value added created in the production of goods and services, amounted to EUR 224 billion in 2017 at current prices. GDP per capita was EUR 40,600.

Households' adjusted disposable income describing their economic well-being increased by 0.5 per cent in real terms in 2017. In addition to net income, adjusted income also takes into consideration welfare services produced by the public sector and organisations for households, such as educational, health and social services.

1.1 Production development varied by industry

Examined at current prices, value added grew strongly in nearly all main industries. Growth was strongest in mining and quarrying, energy supply, administrative and support services, accommodation and food service activities and construction. Amon major industries, value added decreased slightly in human health and social work activities, public administration and education.

Figure 2. Change in value added at current prices in 2017, per cent.

The volume of value added increased most in administrative and support service activities, energy and water supply, manufacturing and technical activities. Volume growth was also strong in accommodation and food service activities, transport, construction, financial and insurance activities and information and communication activities. The volume of value added decreased in human health and social work activities.

1.2 Exports, private investments and households’ consumption increased demand

Demand in the national economy was mainly boosted by investments, the volume of which grew by 4.0 per cent. The volume of households’ consumption grew by 1.4 per cent, in turn, the volume of public consumption expenditure declined by 0.5 per cent. The proportion of consumption expenditure to GDP was 77.3 per cent.

Private investments grew by 4.6 per cent and government investments by 1.8 per cent. Especially construction investments in machinery and equipment increased. By contrast, investments in research and development and in computer software decreased slightly. The investment rate or the proportion of investments of gross domestic product grew to 22.1 per cent.

The volume of exports increased by 7.5 per cent in 2017 and that of imports grew by 3.5 per cent. Import prices rose by more than export prices, both imports and exports increased measured at current prices. The export of goods increased more than the import of goods. The export of services increased clearly more than imports, service exports were still around EUR one billion lower than imports. The share of exports of gross domestic product increased to 38.5 per cent and the share of imports to 38.2 per cent.

1.3 Work input increased last year

According to the National Accounts, the number of employed persons grew by 29,700 or 1.2 per cent last year. Jobs increased most in business activities and construction. Jobs decreased most in financial and insurance activities. Hours worked increased by 39 million hours or 0.9 per cent.

The productivity of labour in the whole national economy, i.e. gross value added at constant prices divided by number of hours worked improved by 2.1 per cent last year.

1.4 Prices rose slightly

The economy’s overall price level rose by 0.8 per cent last year as measured by the GDP price index. By contrast, price changes in individual products may have been large.

Last year, the Consumer Price Index rose by 0.7 per cent, but the price index of household consumption expenditure in National Accounts went up by 1.2 per cent. In National Accounts, the prices of housing services are measured with changes in market rents, whereas the Consumer Price Index also takes into consideration the expenditure on owner-occupied housing. The methods used in National Accounts and in the Consumer Price Index for measuring development in the prices of insurance and financial intermediation services also deviate from each other.

The terms of trade weakened by 0.4 per cent because import prices grew by 3.5 per cent but export prices only by 3.1 per cent.

1.5 National income grew by 2.9 per cent in real terms

Net national income grew by 3.7 per cent in nominal terms last year, and stood at EUR 33,700 per capita. In real terms, net national income grew by 2.9 per cent, which was slightly more than the gross domestic product. Finland's gross national income amounted to EUR 226 billion last year. It was slightly higher than gross domestic product because property income from abroad was higher than property expenditure to abroad.

Households’ wage and salary income increased by 2.2 per cent but employers’ social insurance contributions decreased by 5.5 per cent in 2017. In all, the share of compensation of employees of national income was 56.7 per cent. The respective proportion in the previous year was 58.3 per cent. Property and entrepreneurial income in the national economy increased by 11.7 per cent and its share of the national income rose to 27.7 per cent. The respective proportion in the previous year was 25.8 per cent.

1.6 Non-financial corporations’ profits grew

Non-financial corporations' operating surplus describing profits from their actual operations went up by 21 per cent from the previous year. Non-financial corporations’ entrepreneurial income also increased by nine per cent as property income decreased and property expenditure grew somewhat. Entrepreneurial income also takes into consideration property income and paid interests and rents, and corresponds roughly with profit before payment of taxes and dividends.

Non-financial corporations paid 23 per cent more direct taxes last year than in the previous year. Non-financial corporations are estimated to have paid eight per cent less dividends. The net saving of non-financial corporations increased by EUR 2.9 billion from the previous year.

Figure 3. Non-financial corporations, operating profit from the operations proper (= operating surplus, left column) and net saving (right column), EUR billion

Non-financial corporations’ net lending, or financial position, showed a surplus of EUR 10.7 billion, as against EUR 9.5 billion in the previous year. The financial position improved as profits increased even if non-financial corporations’ investments also grew.

The financial position of financial and insurance corporations was EUR 0.1 billion in surplus and their operating surplus was EUR 0.3 billion higher than in 2016. Financial corporations’ commission income grew by good one per cent and their interest income (financial intermediation services indirectly measured) remained at the level of the previous year. The operating surplus of financial corporations increased by EUR 0.4 billion, which was mainly affected by decreased intermediate consumption. The value added of financial corporations grew by EUR 0.3 billion, the value added of insurance corporations increased by EUR 0.1 billion year-on-year.

1.7 General government deficit 0.7 per cent relative to GDP

General government’s net lending, or financial position, showed a deficit of EUR 1.5 billion, while the deficit was EUR 3.7 billion in the previous year. Last year, the deficit was 0.7 per cent relative to GDP, which was clearly below the three per cent reference value of the European Union.

Last year, the financial position of central government showed a notable deficit for the ninth successive year. The deficit (net borrowing) was EUR 4.0 billion, while one year before it was EUR 5.7 billion.

State revenues from taxes went up by 3.6 per cent. Revenue grew most from income taxes and value added taxes.

Current transfers to local government (incl. repayments of value added tax) declined by 2.7 per cent. Current transfers to social security funds grew by 10.7 per cent. Central government's consumption expenditure fell by 3.8 per cent and gross fixed capital formation by 2.3 per cent.

The deficit or net borrowing of local government (municipalities and joint municipal authorities, etc.) was EUR 0.3 billion, having been EUR 0.9 billion in the year before. Municipalities' tax revenues increased by EUR 0.8 billion. Final consumption expenditure went up by 0.5 per cent in nominal terms, and gross fixed capital formation is estimated to have grown by 4.7 per cent.

The surplus of employment pension schemes’ net lending decreased from the previous year. The surplus was now EUR 2.0 billion, while one year before it was EUR 2.4 billion. The surplus was lowered by growth in paid pension benefits. The surplus does not include holding gains in assets. Revenues from pension contributions grew by 1.5 per cent and employment pensions paid by employment pension funds by 4.1 per cent. Other social security funds were EUR 0.8 billion in surplus, the surplus in 2016 was EUR 0.5 billion.

Figure 4. General government surplus/deficit, per cent of GDP

The size of the public economy is described by general government's share of the gross value added, which was 18.5 per cent in 2017, having been 19.5 per cent one year earlier. The proportion of total public expenditure to GDP dropped to 54.0 per cent. In the previous year, the proportion was 55.9 per cent. Total public expenditure includes a notable amount of internal public sector expenses that are included in the calculations twice.

The tax ratio, or the ratio of taxes and statutory social security contributions to GDP, was 43.3 per cent last year. The tax ratio declined by 0.7 percentage points from the previous year.

1.8 Households’ real income grew by nearly one per cent

In 2017, households’ disposable income increased by 1.9 per cent in nominal terms and by 0.8 per cent in real terms. Households’ adjusted disposable income increased by 1.4 per cent in nominal terms and by 0.5 per cent in real terms. Adjusted income also takes into consideration welfare services, i.e. the individual services that general government and organisations produce for households, such as educational, health and social services.

Figure 5. Annual change in households’ disposable real income (left column) and household's adjusted real income (right column), per cent.

Households’ wage and salary income went up by 2.2 per cent and social benefits by 0.9 per cent. The wages and salaries sum increased as employment grew. Households’ property and entrepreneurial income went up by 2.0 per cent. Direct taxes paid by households and compulsory social security contributions increased by 0.9 per cent.

In 2017, households’ consumption expenditure increased by 2.6 per cent in nominal terms and by 1.4 per cent in real terms. The share of housing of the consumption expenditure continued growing reaching 28.8 per cent. Households’ savings rate, i.e. the ratio of savings to disposable income, was negative for the second year in a row, at -1.3 per cent. In the previous year, it was -0.7 per cent.

Households’ fixed investments primarily in dwellings increased by 8.0 per cent in nominal terms. The financial position of households showed a deficit of EUR 7.5 billion, while the deficit in the previous year was EUR 5.9 billion.

Households' indebtedness ratio grew further and stood at 128.9 per cent at the end of 2017, which was 2.6 percentage points higher than one year earlier. The indebtedness ratio expresses the ratio between the loans and annual disposable net income in accordance with financial accounts.

1.9 Current account surplus EUR 1.4 billion

Last year, Finland's current account turned to a surplus of EUR 1.4 billion after six years of being in deficit. When imports are also valued at FOB price (at the border of the exporting country) and not at CIF price (at the border of the importing country), as is done in the foreign trade statistics of Finnish Customs, the goods trade showed a surplus of EUR 1.8 billion. However, the balance of services trade showed a deficit of EUR 1.0 billion.

EUR 2.0 billion more property income was received from the rest of the world than was paid there. The current transfer outflow was clearly higher than the received income transfers. Data on property income and expenditure are still extremely preliminary.

1.10 Next revision in January 2019

National Accounts for 2016 and 2017 will next be revised in January 2019.

These revised preliminary data are based on the information on economic development that was available by 5 July 2018. The coverage and quality of the source data concerning the non-financial corporations sector was slightly lower than normal and may affect the distribution of added value at detailed levels of industrial classifications.

The recording of factoryless goods production was changed in the National Accounts one year ago starting from the statistical reference year 2014. The margin of factoryless goods production or net sales from abroad to abroad was recorded as goods exports instead of service exports and now the corresponding revision was made for the statistical reference years 2006 to 2013 (see: Changes in these statistics).

More information on the national accounts methods can be found on Statistics Finland’s website at: http://tilastokeskus.fi/til/vtp/men_en.html

Source: National Accounts.

Inquiries: Tuomas Rothovius 029 551 3360, kansantalous@stat.fi

Director in charge: Ville Vertanen

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Updated 12.7.2018