Press release 29.2.2008

Gross domestic product grew by 4.4 per cent last year

According to Statistics Finland's preliminary data, the volume of Finland's gross domestic product grew by 4.4 per cent in 2007. Gross domestic product, or the totalled up value added of the goods and services produced, amounted to EUR 179 billion last year.

In the first quarter of the year, output was 1.3 per cent greater than in the previous quarter. Gross domestic product grew by 1.0 per cent in the second quarter of the year. In the third quarter, gross domestic product grew by 0.5 per cent and in the last quarter by 0.9 per cent from the previous quarter.

Volume changes of GDP 1998 - 2007, %

In 2007 demand in the national economy was boosted by exports, consumption and investments. The volume of exports went up by 4.8 per cent. The volume of consumption expenditure grew by 2.8 per cent and that of investments by 7.6 per cent. The volume of imports went up by 4.1 per cent.

Of total consumption expenditure, private final consumption expenditure increased by 3.7 per cent and public final consumption expenditure by 0.8 per cent. Private investments grew by 8.1 per cent and government investments by 3.4 per cent. Of all investments, those in office premises grew the most, by 20 per cent. Investments in machinery and equipment grew by 6.2 per cent and investments in residential buildings grew by only 0.5 per cent. The rate of investments rose to 20.3 per cent.

Value added in manufacturing grew by 5.4 per cent from the previous year. Growth was most significant in the metal industry, where value added grew by 10 per cent. Building construction also continued lively; its value added grew by 7.5 per cent from the previous year.

In the service industries, value added went up by a total of 3.5 per cent. Private services grew by 4.5 per cent and government services by 0.8 per cent. Trade increased by 5.1 and transport by 2.6 per cent. In primary production, value added grew by 16.8 per cent on account of good crops and fellings.

Non-financial corporations' profits grew clearly

Non-financial corporations' operating surplus grew by 13 per cent and their entrepreneurial income by 11 per cent from the previous year. Entrepreneurial income roughly corresponds with profit before payment of taxes and dividends. Non-financial corporations' profits were higher than ever before. Non-financial corporations paid 24 per cent more direct taxes than in the previous year.

Non-financial corporations paid 2 per cent more in dividends than in the year before. Non-financial corporations' fixed investments in Finland grew by 16 per cent last year in nominal terms, which is more than in a long time.

Households' real income grew by 2.4 per cent

Households' disposable income increased last year by 4 per cent in nominal terms and by 2.4 per cent in real terms. Households' wage income went up by 5.9 per cent, property and entrepreneurial income by 2.4 per cent and social security benefits by 2.6 per cent. The volume of direct taxes paid was 6.2 per cent up from the year before.

In nominal terms, households' final consumption expenditure grew by 5.4 per cent. Regular income was not enough to cover consumption expenditure, which resulted in a savings ratio, or savings relative to disposable income, of -3.8 per cent. Households' indebtedness increased again, so that at the end of September it stood at 101.8 per cent and exceeded annual disposable income.

General government surplus rose to EUR 9.5 billion

The financial position of central government showed a surplus of EUR 3.6 billion last year. State revenues from taxes went up by 6 per cent. Final consumption expenditure went up by only 2.2 per cent in nominal terms and income transfers by 1.8 per cent. The financial position of local government was nearly on balance, the deficit amounted to just EUR 0.1 billion. Municipalities' tax revenues went up by 7.7 per cent and final consumption expenditure in nominal terms by 5.1 per cent.

The EMU surplus of general government was 5.3 per cent of GDP, or the largest since 2000. The EMU debt amounted to 35.4 per cent of GDP.

The proportion of public expenditure of GDP fell from the previous year's 48.9 per cent to 47.5 per cent. The tax rate, or the proportion of taxes and statutory social security contributions of GDP, contracted to 43.1 per cent last year. In 2006 the tax rate was 43.5 per cent.

Source: National accounts, Preliminary annual data and 4th quarter of 2007. Statistics Finland
General government deficit and gross debt according to EMU criteria. Statistics Finland

Inquiries:
National accounts: Mr Pasi Koikkalainen +358 9 1734 3332, Mr Olli Savela +358 9 1734 3316, skt.95@stat.fi
General government deficit and debt: Mr Mika Sainio +358 9 1734 2686, Ms Reetta Varjonen-Ollus +358 9 1734 3533, rahoitus.tilinpito@stat.fi

Director in charge: Mr Ari Tyrkkö

Related statistical releases:
National accounts

Quarterly accounts

General government deficit and gross debt according to EMU criteria

Tax ratio