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With output close to its potential, Finland is in a more favourable cyclical position than the rest of the euro area on average. The pick-up in world trade and a revival in business investment are expected to become increasingly important as drivers of growth, which should average about 3% a year to 2006.
A moderate wage settlement would allow cuts in labour taxation without compromising aggregate fiscal objectives. However, efficiency gains in the public sector and greater private service provision are required to create room for further tax cuts. Additional reforms, particularly a tightening of conditions applying to early retirement schemes, are needed to achieve the government’s employment target.
|Population (000s), 2003||5 213|
|Area (000 sq km)||338|
|GDP (Billion USD), 2003||160.8|
|Life expectancy at birth (Women, Men), 2002 ||81.5, 74.9|
|Total labour force (000s), 2003||2 620|
|Indicators||% change unless otherwise indicated|
|Consumer price index||0.2||1.7||1.9|
|Short-term interest rate (%)||2.1||2.1||2.7|
|Unemployment rate (%)||8.9||8.7||8.2|
|General government financial balance (% GDP)||2.3||2.1||2.3|
|Current account balance (% GDP)||4.9||4.9||5.0|
© OECD Observer
No 245, November 2004