This Survey is published on the responsibility of the Economic and Development Review Committee (EDRC) of the OECD, which is charged with the examination of the economic situation of member countries.The economic situation and policies of Finland were reviewed by the Committee on 3 December 2015. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 23 December 2015.The Secretariat’s draft report was prepared for the Committee by Christophe André and Jon Pareliussen, with contributions from Thomas Chalaux, under the supervision of Vincent Koen. Secretarial assistance was provided by Mercedes Burgos.The previous Survey of Finland was issued in February 2014.

Finland enjoys a high level of income and well-being. Nevertheless, output has been dragged down by the global downturn, the decline of the electronics and paper industries and the Russian recession. Unemployment is rising rapidly, but social safety nets keep income inequality low. The general government deficit is above 3% of GDP and gross debt will rise above 60% of GDP in 2015. The government has an ambitious programme to restore competitiveness and fiscal sustainability through budgetary measures and structural reforms.

Finland has been hit hard by several shocks, in addition to the global economic slowdown. Electronic exports, demand for paper and exports to Russia have collapsed. This has durably lowered the economic growth potential. Furthermore, the population is ageing rapidly. Against this background, the key messages of this Survey are:

This table reviews action taken on key recommendations from previous Surveys. Recommendations that are new in this Surveys are listed at the end of the relevant chapter.

The debt dynamics simulations presented in this document are based on OECD estimates for long-term output growth and expenditures on pensions, health and long-term care. Over the long term, potential real GDP is assumed to increase by 1.5% and the GDP deflator by 2% per year (Johansson et al., 2013). Pension costs mount with ageing (OECD, 2013c). The baseline scenario (No policy action) does not incorporate the impact of the pension reform to be implemented from 2017. Public health and long-term care expenditure projections are based on the cost-containment scenario in De la Maisonneuve and Oliveira Martins (2013), in which the increase in public health and long-term care spending between 2010 and 2060 is contained to about 2.5 percentage points of GDP. Although precise quantification is challenging, such an outcome seems plausible if the social welfare and health care reform is successfully implemented.