Finland s economy is set for another weak year of growth. The gov- ernment s economic reforms will take time to bear fruit, and the sharp contraction in Russia s economy is dampening external demand. ...Finnish exports to Russia dropped by -- y-o-y in the first five months of ----, with declines recorded in most sectors. The further decline in oil prices across the second half of ---- and the associated weakening of the Russian rouble have exacerbated the loss in demand brought about by Russia s recession, and we expect only a modest stabilisation in economic activity in ----. Domestically, the situation is highly challenging. ...More recently, the government has also mulled some radical ideas for reforming the social security system, including the adoption of a universal basic income which would give every citizen EUR--- a month. Although such a scheme has never been tested on a national level before, -- of the population - Business Monitor International Ltd www.bmiresearch.com
...Source: Statfin, BMI economy remains set to spend a fourth consecutive year in reces- sion. The economy has been struck by a combination of cyclical and structural shocks, from which is it unlikely to recover in the near-term. ...First, the current coalition government looks quite weak, having barely avoided collapse earlier in November ---- over disagreements on healthcare reform between the Centre Party and the National Coalition party, which are both members of the current three-party coalition. Given that the reform agenda proposed by the coalition government is one of the most ambitious packages put forward to date, internal divi- sions within the coalition portend poorly for the survival of the government, particularly as they are likely to face stiff resistance to reform in the future from the trade unions. The second is the upcoming parliamentary debate on euro membership in ----. While the majority of Finns support the country s euro membership, support has fallen to just -- in December ---- according to local pollsters, while Eurobarometer polls showed that support for the single currency had fallen to -- in November ----, down from -- in the previous year. While it remains extremely unlikely that Finland will exit the single currency, any indications that the country is moving closer to the door could carry severe ramifications for sovereign credit (see No Quick Fixit : Could Finland Leave The Euro? ,
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