Finland country brief

Overview

Finland is the most sparsely populated country in the European Union with a population of 5.5 million (2018) 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 13 multi-member constituencies every four years. Parliament can override presidential vetoes.

Political developments

President Sauli Niinistö from the National Coalition Party won the 2018 presidential election with 63 per cent of the vote.

Finland has a multi-party system, with four strong parties. As no single party can usually gain a majority, parties must work with each other to form coalition governments. Finnish national parliamentary elections were last held on 14 April 2019. The centre left Social Democrats Party won 17.7 per cent of the vote and secured 40 of the 200 seats in Parliament. The Social Democrats Party leader, Mr Antti Rinne, became Finland's first centre left Prime Minister in 20 years, forming a broad governing coalition with the Centre Party (31 seats), Green League (20 seats), Left Alliance (16 seats) and the Swedish People’s Party (10 seats). Green League leader, Mr Pekka Haavisto, was appointed Foreign Minister and Mr Ville Skinnari, from the Social Democrats Party, was appointed Minister for Development Cooperation and Foreign Trade.

Finland has the most gender equal parliament in Europe with 58 per cent of the Ministers being women.

From 1 July to 31 December 2019, Finland will hold the Presidency of the Council of the European Union (EU). This will be the third time for Finland at the helm of the EU since becoming a member in 1995. Finland’s presidency will be dominated by migration and border management, BREXIT, strengthening the EU’ security and defence capabilities and a strong focus on climate change.

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.

Economic overview

According to the IMF, Finland's economy is enjoying its third consecutive year of economic recovery after a series of structural and cyclical shocks since 2007. The employment rate has picked up sharply and unemployment is at its lowest level since 2011. Wages have started to recover, but inflation remains low. Export market shares have improved slightly leading to a pickup in exports, while stronger tax revenues and lower spending have improved fiscal balances. The IMF projects real GDP growth of 1.9 per cent in 2019, down from 2.4 per cent growth in 2018.

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.

After the April 2019 elections, Finland's new government announced its intention to increase public expenditure by 1.2 billion euros over its four year term. It aims to create 60,000 new jobs which are needed to reach its employment target of 75 per cent and it will increase public spending on welfare and infrastructure. Finland’s government has also pledged to make the country carbon neutral by 2035. Currently, fossil fuels and peat together supply about 40 per cent of Finland’s energy needs.

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.

2019 will mark seventy years of diplomatic ties between Australia and Finland. Australia first 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. In 2018, a Finnish delegation led by Mr Mika Lintilä, Minister for Economic Affairs, visited Australia and New Zealand. Finland's then Minister for Social Affairs and Health, Ms Pirkko Mattila, visited Australia in September 2017. Finland's then Foreign Minister and Deputy Prime Minister, Mr Timo Soini visited Australia in February 2016, shortly followed by Defence Minister Jussi Niinistö’s visit in March 2016. Then Minister for European Affairs and International Trade, Dr Alexander Stubb, visited Australia in December 2013. Then President Ms Tarja Halonen visited Australia in February 2007.

Australia's Ambassador for Cyber Affairs, Dr Tobias Feakin, visited Finland in June 2017. Australia’s then 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, Mr Greg Hunt, visited Finland for discussions on the status of the Great Barrier Reef. Then Prime Minister Mr Kevin Rudd visited Finland in 2011 to attend the UN High-Level Panel on Global Sustainability and to meet Finland’s then Foreign Minister Mr Alexander Stubb. Then Foreign Minister Stephen Smith visited Finland in April 2010.

Bilateral economic and trade relationship

Total two-way merchandise trade between Australia and Finland was worth $1.2 billion in 2018. Australia's goods exports to Finland totalled $88 million, comprising mainly coal and alcoholic beverages. Finland's goods exports to Australia totalled $1.1 billion and included civil engineering equipment and parts, and paper and paperboard. The total stock of Australia's investment in Finland was worth $3.8 billion in 2018, with Finland investing $863 million in Australia. Despite this low figure, a range of Finnish multinationals, such as Nokia, Stora Enso, Cargotech, Wärtsilä and Konecranes, have a presence in Australia, contributing to our jobs and economic growth.

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

Last updated: August 2019



Last Updated: 22 August 2019