Finland country brief

Overview

Finland is the most sparsely populated country in the European Union with a population of 5.5 million (2016) spread over 338,145 square kilometres. Under the Finnish Constitution, Finland is a bilingual country with Finnish and Swedish as official languages. The Åland Islands, located between the Finnish mainland and Sweden, are an autonomous, demilitarised and monolingual Swedish-speaking administrative province of Finland. The capital of Finland is Helsinki. Finland celebrates its National Day (Independence Day) on 6 December, the date it gained independence from the Russian Empire in 1917.

Political overview

System of Government

The Republic of Finland is a parliamentary democracy with a republican constitution. The President is elected for a six-year term. Most executive power lies in the Cabinet headed by the Prime Minister. However, the President handles Finland's foreign affairs in cooperation with the Cabinet, except for certain international agreements and decisions of peace or war, which must be submitted to the Parliament. The President must approve laws and is also Commander-in-Chief of the armed forces. The unicameral parliament (Eduskunta in Finnish, Riksdag in Swedish) has 200 members directly elected from 15 multi-member constituencies every four years. Parliament can override presidential vetoes.

Political developments

President Sauli Niinistö from the National Coalition Party won the 2012 presidential election with 63 per cent of the vote.

Finland has a multi-party system, with three strong parties, in which no one party often has a chance of gaining power alone, and parties must work with each other to form coalition governments. Finnish national parliamentary elections were last held on 19 April 2015. The Centre Party won 21 per cent of the vote and secured 49 of the 200 seats in Parliament. The Centre Party Chairman, Juha Sipila, became Finland's Prime Minister, forming a centre-right governing coalition with the Finns Party (38 seats) and the National Coalition Party (37 seats). 

The coalition narrowly avoided collapse in June 2017, after the Centre Party and National Coalition Party announced they were unwilling to remain in coalition with the Finns Party, following its decision to elect controversial immigration hard-liner Jussi Halla-aho as its leader.  A collapse was averted when a majority of Finns Party parliamentarians broke away to form a new parliamentary group, now known as the Blue Reform party, that the coalition partners were willing to work with. The reformed coalition now has a 105-seat majority in the 200-seat Parliament – Centre Party (49), National Coalition Party (37) and Blue Reform (19). 

The next general election is scheduled to be held in April 2019.

Foreign Policy

Finland's foreign policy during the Cold War was based on neutrality between the Western powers and the Soviet Union, while simultaneously stressing Nordic cooperation and cautious economic integration with the European Economic Community.

After the dissolution of the Soviet Union in 1991, Finland unilaterally abrogated the last restrictions imposed on it by the Paris peace treaties of 1947 and the Finno-Soviet Agreement of Friendship, Cooperation, and Mutual Assistance. In 1995, Finland became a member of the European Union, along with Sweden and Austria, and was one of the first countries to join the Eurozone in 1999. Finland supports development of the EU's European Security and Defence Policy and joined the EU Battlegroups in 2006.

Finland has not joined NATO. Finland has participated in the NATO's bilateral Partnership for Peace (PfP) programme since 1994, the Euro-Atlantic Partnership Council (EAPC) since its founding in 1997, and the NATO Response Force in 2008. It contributes to the NATO-led Resolute Support Mission in Afghanistan. In February 2017, NATO and Finland signed a Political Framework Arrangement on cyber defence cooperation. In 2017, the Government announced that it would continue to partner with NATO but had no plans to join.

Economic overview

According to the IMF, Finland's economy is slowly emerging from a protracted recession. The recovery is fragile and medium-term growth is projected to remain sluggish. It has experienced a unique confluence of structural and cyclical shocks since 2007. Exports have suffered due to the declines of Nokia and the paper industry, compounded by weak external demand, especially from the Eurozone and Russia. Wage hikes in 2008-10 and weak productivity growth hurt competitiveness. Rapid population aging is a further drag on growth. As a result, the current account and fiscal balances have deteriorated. Real GDP growth rose from 0.4 per cent in 2015 to 1.4 per cent in 2016. The IMF projects it will remain at 1.3 per cent in 2017, before reaching around 1.5 per cent over the medium-term.

After the April 2015 elections, Finland's new government announced a broad structural reform program to reduce labor costs and improve competitiveness. Pension reforms to prolong working careers were introduced to help mitigate the impact of population aging on labour force growth. The Government is also developing reforms to improve public sector productivity, especially in health and social services. Reviving economic growth remains the Finnish government's central policy tenet.

Finland's economy is highly industrialised, with sizeable high-tech manufacturing, electronics and chemical sectors operating alongside the significant forestry and paper industry. Yet, with over one-third of the country located above the Arctic Circle, Finland is a largely rural and sparsely populated country. With its energy-intensive industries and cold climate, Finland's energy consumption per capita is the highest in the International Energy Agency (IEA).

Finland has few natural energy resources and is highly dependent on imported fossil fuels. Nuclear power currently supplies almost 30 per cent of Finland's electricity and is expected to grow. Finland has an ambitious renewable energy programme, with a view to meeting 38 per cent of its final energy consumption from renewable sources by 2020.

Bilateral relationship

Australia and Finland share warm bilateral relations, underpinned by strong people-to-people links through the sizeable Finnish community in Australia. The 1920s and 1950s saw the main migration waves from Finland to Australia. In the 2016 census, 24,145 people in Australia claimed Finnish ancestry.

Australia established diplomatic relations with Finland in 1949. Australia's Ambassador in Stockholm has non-resident accreditation to Finland. Australia also has a consulate in Helsinki, headed by an Honorary Consul. Finland has an embassy in Canberra and honorary consulates in all states and the Northern Territory.

Australia and Finland signed a bilateral social security agreement which came into force on 1 July 2009. The agreement provides improved social security protection to people who have lived or worked in both Australia and Finland. Other agreements between Australia and Finland include a Working Holiday Maker Arrangement and a Double Taxation Agreement.

High-level visits

High-level visits are important for promoting cooperation and understanding between Finland and Australia. Finland's Minister for Social Affairs and Health, Ms Pirkko Mattila, visited Australia in September 2017. Finland's Foreign Minister and Deputy Prime Minister, Timo Soini visited Australia in February 2016. Then Minister for European Affairs and International Trade, Dr Alexander Stubb visited in December 2013. Then President Tarja Halonen visited Australia in February 2007. 

Australia's Ambassador for Cyber Affairs, Dr Tobias Feakin, visited Finland in June 2017. The Governor General and Lady Cosgrove were hosted by President Niinistö on an official visit to Finland in April 2016. In January 2015, then Minister for the Environment, Greg Hunt, visited Finland for discussions on the status of the Great Barrier Reef. Then Foreign Minister Stephen Smith visited Finland in April 2010.

Bilateral economic and trade relationship

Total two-way merchandise trade between Australia and Finland in 2016 was $837 million. Australia's exports to Finland totalled $72 million comprising mainly precious metals and alcoholic beverages. Finland's exports to Australia totalled $765 million, and included paper and paperboard, and civil engineering equipment and parts. Australia's investment in Finland amounted to $3.6 billion in 2016, with Finland investing $400 million in Australia.

For information on doing business in Finland, see Austrade’s website.

Last updated: September 2017


Last Updated: 19 September 2017