Finland country brief

Overview

The Republic of Finland is the most sparsely populated country in the European Union with a population of 5.5 million (2015) spread over 338,145 square kilometres. The Åland Islands, off the south-western coast, are an autonomous, demilitarised administrative province of Finland. Under the Finnish Constitution, Finland is a bilingual country with Finnish and Swedish as official languages. The capital of Finland is Helsinki. Finland celebrates its National Day (Independence Day) on 6 December.

Political overview

System of Government

The Republic of Finland is a parliamentary democracy with a republican constitution. The unicameral parliament (Eduskunta) has 200 members directly elected from 15 multi-member constituencies every four years.

Political developments

Finnish national parliamentary elections were held on 19 April 2015.  The opposition Centre Party won the largest share of the vote, securing 49 of the 200 seats in Parliament. The Social Democrats, the National Coalition Party and the Finns Party lost support compared with the previous Parliamentary elections. The Centre Party Chairman, Juha Sipila, became Finland’s Prime Minister.  Following the election, Sipila formed a centre-right, three-party, majority coalition with the Finns Party and the National Coalition Party.

Foreign Policy

Finland became a member of the European Union in 1995, 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 is a non-NATO contributor to the International Security Assistance Force in Afghanistan.

Economic overview

According to the IMF’s latest assessments, Finland’s economy has been in recession for three years. 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 have hurt competitiveness. Rapid population aging is a further drag on growth. As a result, the current account and fiscal balances have deteriorated. GDP in Finland was 0.4 per cent in 2015. The IMF projects a modest strengthening in 2016 to 0.9 per cent, however, growth is likely to remain low.

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 labor 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 2011 census, 22,420 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 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. In his former role as Minister for European Affairs and International Trade, Dr Alexander Stubb led a business mission to Australia and met Foreign Minister the Hon Julie Bishop MP in December 2013. In January 2015, Australia’s Minister for the Environment, Greg Hunt, visited Finland for discussions on the status of the Great Barrier Reef.

Bilateral economic and trade relationship

Total two-way merchandise trade between Australia and Finland in 2014 was A$809 million (our 46th largest merchandise trade partner). Australia's exports to Finland totalled A$46 million comprising mainly alcoholic beverages and inorganic chemical elements. Finland's exports to Australia totalled A$763 million, and included paper and paperboard and civil engineering equipment and parts.

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

Last updated: February 2016

Last Updated: 16 July 2014