THE harbour may be frozen, but that does not stop a ferry with a few intrepid tourists on board from making its way through the ice to Suomenlinna, a former fortress and popular sightseeing spot near Helsinki. Finns, whose country stretches from the Baltic Sea to the Arctic, are inured to hostile conditions, but their economy seems less hardy. It is stuck in an unrelenting freeze. A centre-right coalition government formed last spring is trying to break the ice, but has not yet got far.
After thriving for several years both before and after joining the euro in 1999, Finland ran into trouble after the financial crisis of 2007-08. Output plunged by 8.3% in 2009. Although GDP grew in 2010 and 2011, it then declined for the following three years—and may have contracted again in 2015. Short-term data suggest that the economy will be flat in early 2016, says Jussi Mustonen, chief economist at the Confederation of Finnish Industries.
Erkki Liikanen, governor of the central bank, explains that Finland has suffered an extraordinary combination of adverse shocks. The most important of these was the decline of Nokia, once Finland’s biggest...Continue reading
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