Drawing on data sources such as the Grant Thornton IBR, the EIU and the IMF, this short report considers the outlook for the economy, including the expectations of 200 businesses interviewed in Finland, and more than 12,500 globally, over the past 12 months.

1. Focus on: Finland
Grant Thornton International Business Report 2013

2. Focus on: Finland
200
business
Introduction
interviews
Finland is a country in northern Europe of approximately
5.4m people. In 2012, its GDP was approximately
US$250bn, making it the 42nd largest economy in the
world and the seventh largest in the eurozone.
Drawing on data sources such as the Grant Thornton
International Business Report (IBR), the Economist
Intelligence Unit (EIU) and the International Monetary
Fund (IMF), this short report considers the outlook
for the economy, including the expectations of 200
businesses interviewed in Finland, and more than
12,500 globally, over the past 12 months.
Joakim Rehn
Grant Thornton Finland
Managing partner
T +358 (0)9 5123 3344
E joakim.rehn@gtfinland.com
W www.gtfinland.com
US$250bn
gross domestic product
5.4 million inhabitants
Focus on: Finland 2

3. Focus on: Finland
Economy
Economy
expanded by
Finland was left relatively unscathed by the first wave of the eurozone
sovereign debt crisis, growing strongly in both 2010 and 2011. However
as the currency bloc’s troubles have continued, the economy has
stagnated, contracting in 2012 as demand slowed in key regional export
10%
markets. Despite this, the economy remains dynamic; it ranked10% in
fifth
the Global Dynamism Index 2013, the highest in Europe, due to fertile
59%
8%
science and technology investment (third globally) and a sound business
operating environment (fifth globally). Germany and Sweden are7%
the
6%
principal trade partners.
0.4%
Export destinations
in Q3-2013
10%
10%
17%
59%
8%
12%
47%
7%
6%
9%
17%
Sweden
Germany
Russia
47%
United States
Netherlands
Other
12%
9%
6%
6%
9%
9%
5
Key indicators
• the economy expanded by a seasonally
adjusted 0.4% in Q3 from Q2, up from
0.3% in the previous three-month period
• the economy contracted by 0.2%
compared with the same period in 2012,
although this was an improvement from
the 1.1% decline observed in Q2
• services declined by 1.2% in Q3,
highlighting the ongoing weakness in
domestic demand
5
Import originations
• however, consumer confidence may
have turned a corner, rising to 6.4 in
10%
November, the highest value in five
10%
months, although still 10% way below
some
the long-run average (12.2) 10%
59%
• a current account deficit of €1.5bn was 8%
recorded for the first nine months of
59%
8%
7%
the year, a marked improvement from
6%
a shortfall of €3bn in the same7%
period
of 2012.
6%
4
4
3
3
17%
17%
2
47%
12%
12%
47%
1
9%
0
6%
6%
9%
9%
Germany
Sweden
China
Russia
Netherlands
Other
2
1
0
-1
9%
-1
Source: Observatory of Economic Complexity (2013)
5
-2
5
4
-3
4
2013
2014
2015
3
3
-2
-3
2013
2016
2014
Focus on: Finland 3
2017
2018
20

4. %
Focus on: Finland
10%
8%
12%
47%
9%
47%
Key indicators: short to medium-term forecasts
5
4
17%
1
12%
9%
5
4
3
2
1
0
-1
2
9%
3
-2
2014
2015
0
-1
-2
-3
2013
Source: EIU (2013)
2014
2015
2016
2017
2018
Real GDP growth (%)
Export growth (%)
1.1%
2016
in 2013
2013
forecast growth
6%
-3
-1.0%
The sale by Nokia of its handset devices
and services division to Microsoft for
€5.4bn in September is unlikely to have
too much of a negative effect on the wider
economy. Nokia’s importance has declined
significantly over recent years: in 2000 it
accounted for 4% of total GDP, compared
with just 0.4% in 2011. Its share of total
employment declined from 1.0% to
0.7% over the same period but under the
takeover deal, 32,000 Nokia employees
will transfer to Microsoft, of whom 4,700
of whom are in Finland. The new-look
Nokia looks set to concentrate on its
mapping and networking divisions.
9%
6%
The economy is expected to contract by 1.0% in 2013 as another difficult
7%
year for the currency union draws to a close. However, growth rates
6%
are expected to pick up across Europe in 2014 with expansion of 1.1%
forecast for Finland, rising to 1.9% in 2015. This improved performance
is expected to be supported by a recovery in trade. Exports are forecast
to decline by 1.0% in 2013, but growth of 2.8% is forecast in 2014
accelerating to 4.5% in 2015. Any further deterioration in the eurozone
is a serious downside risk to this forecast.
Public debt is well under control; net
government debt stands at -50%
(indicating government finances are in
credit) which compares to 35% in the
Netherlands and 56% in Germany.
However this strong position is expected
to be somewhat eroded over the mediumterm with net debt falling to -36% by
2018. The budget balance is well within the
EU target range of -3% at -2.2% in 2013
and is expected to fall further to just -0.5%
by 2018.
8%
59%
10%
17%
10%
7%
Economic outlook
6%
10%
Budget balance (% of GDP)
forecast growth
2017
in 2014
2018
Focus on: Finland 4

5. Focus on: Finland
59%
59%
Business growth prospects
10%
8%
7%
6%
6%
8%
7%
10%
6%
9%
Similarly, profit increase expectations across 2013 have averaged net 24% in
Finland, down from 31% in 2012 and 38% in 2013. The eurozone average is
actually slightly lower at 19% but the Nordic average is again much higher at 37%.
Expectations for increasing investment in plant and machinery have also suffered
over recent quarters, falling from 36% in Q1 to 24% in Q2 and 16% in Q3. The
2013 average of 28% is down on the 36% 2012 result. However, Finnish businesses
remain more bullish that peers across the eurozone (25%) and Nordic region (23%).
The labour market remains tricky. On average across 2013, net -2% have indicated an
expectation to hire, suggesting more plan to lose staff than plan to hire. This is down
from 6% in 2012 and is below both the eurozone (4%) and Nordic (15%) averages.
10%
10%
Finnish business optimism declined sharply again in Q3, falling to net -56%, down
from -20% in Q2. The 2013 average now stands at -36%, down from -17% in 2012.
The decline in Finland actually came as both the eurozone (8%) and Nordic (34%)
averages improved.
17% Business growth prospects also remain depressed compared with previous years.
Just net 27% of business leaders have indicated an expectation of increasing revenues
in 2013, down from 37% in 2012 and 50% in 2011. This is similar to the eurozone
12%
average (26%) but well below the Nordic result (44%).
9%
47%
47%
Net percentage of businesses optimistic for the economic outlook (next 12 months)
Net percentage of businesses expecting an increase (next 12 months)
40
Investment
28
23
Profits
28%
17%
44
12%
9%
26
40
27
30
Nordic
20
eurozone
10
Finland
0
Source: Grant Thornton IBR 2013
-10
Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13
-20
-60
-30
-50
-40
-40
Revenue
-50
-30
Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-
-20
-60
12%
9%
40
30
20
10
0
-10
-20
-30
-40
-50
-60
-10
9%
17%
9%
10
6%
20
0
25
6%
30
are planning
to invest in
plant and
machinery
24
19
37
Employment
-2
4
15
Source: Grant Thornton IBR 2013
Finland
eurozone
Nordic
Focus on: Finland 5

6. Focus on: Finland
Constraints on expansion
A pervading sense of economic uncertainty is the key challenge business
leaders in Finland feel is stopping them from growing their operations.
Three in five business leaders cite this as a constraint, highlighting the
continuing difficulties caused by a lack of robust resolution to the
eurozone crisis. This is similar to the southern European average (59%)
but well above the wider Eurozone (42%) and Nordic (27%) averages.
A lack of demand is hampering the
growth efforts of more than a third of
Finnish businesses. At 35% this is level
with the eurozone average. Again, the
Nordic average – which includes Finland’s
neighbours, none of whom use the single
currency – is lower at 28%. However,
the situation remains far more crtitical
in troubled southern Europe where 51%
of business leaders cite a lack of demand
as a constraint.
Finland’s business leaders are relatively
unconcerned by a shortage of finance
(18%) compared with Eurozone peers
(27%), although the Nordic average is
again lower (13%). And at 16% the
proportion citing a lack of skilled workers
is below both the eurozone (23%)
and Nordic (21%) averages. Similarly
bureaucracy in the form of regulations
and red tape is constraining just one in
ten Finnish businesses compared with
one in three across the eurozone and
one in six across the Nordic region.
42
18
27
Shortage of finance
Regulations & red tape
a lack of
demand
35
Economic uncertainty
11
uncertainty
on growth
60
37
economic
weighing
Percentage of businesses citing factor as a constraint on growth
Source: Grant Thornton IBR 2013
35
Lack of demand
23
16
Lack of skilled workers
2
8
Transport infrastructure
Finland
eurozone
remains a
challenge
Focus on: Finland 6

7. Focus on: Finland
Finland in Europe
Despite the travails of the single currency and the rise of Eurosceptic
party, The Finns (PS), an overwhelming majority of Finnish businesses
remain positive about their country’s adoption of the euro; 85% say that
entry has been positive for their business, behind only Ireland (88%)
and Germany (86%) and well above the eurozone average of 78%.
And just 6% of Finnish business leaders would like to exit the euro.
Finland’s business leaders are keen to see
further European integration: 98% want
to European countries develop closer ties,
compared to 91% across the eurozone
and just 71% of non-euro EU countries.
Four in five business Finnish business
leaders would like to see closer economic
integration, above the 66% single
currency average, with a further 52%
backing further industrial integration
and 44% developing closer political ties.
What should happen to the number of countries in the single currency?
38
Ireland
86
Germany
85
Finland
82
Spain
Source: Grant Thornton IBR 2013
78
17
They are less keen on any further
expansion of the single currency however;
just 25% want to see enlargement, compared
with 38% across the eurozone. Indeed 36%
want to see some countries drop out of the
euro, more than double the regional average
(17%). As a country with no debt burden
and a small budget deficit, Finnish business
leaders are resistant to call for debt
mutualisation in the form of eurobonds:
50% are against the idea, double the eurozone
average (25%); only peers in Germany
(62%) and Estonia (56%) are less interested.
eurozone
76
Estonia
74
Belgium
73
Greece
67
Italy
64
35
25
Increase
Source: Grant Thornton IBR 2013
Percentage positive about euro adoption
88
39
36
64
Decrease
Stay the same
Finland
eurozone
85%
positive on
Euro
France Netherlands
Focus on: Finland 7

8. IBR 2013 methodology
The Grant Thornton International Business Report (IBR) is the leading mid-market business survey in the world,
interviewing approximately 3,300 senior executives every quarter in listed and privately-held businesses all over the
world. Launched in 1992 in nine European countries, the report now surveys more than 12,500 businesses leaders in 45
economies on an annual basis, providing insights on the economic and commercial issues affecting companies globally.
The data in this report are drawn from interviews with chief executive officers, managing directors, chairmen and
other senior decision-makers from all industry sectors in businesses with 50-499 employees in Finland. Q3 data is
drawn from 3,300 interviews globally (50 in Finland; 300 in the Nordics) conducted in September 2013. 2013 data is
drawn from over 12,500 interviews (200 in Finland; 1450 in the Nordics) conducted between November 2012 and
September 2013.
To find out more about IBR, please visit: www.internationalbusinessreport.com.
Dominic King
Grant Thornton International Ltd
Global research manager
T +44 (0)207 391 9537
E dominic.king@gti.gt.com
Paula Frölander-Ulf
Grant Thornton Finland
Marketing manager
T +358 (0)9 5123 3341
E paula.frolander-ulf@fi.gt.com
© 2013 Grant Thornton International Ltd.
‘Grant Thornton’ refers to the brand under which the Grant Thornton
member firms provide assurance, tax and advisory services to their
clients and/or refers to one or more member firms, as the context requires.
Grant Thornton International Ltd (GTIL) and the member firms are not a
worldwide partnership. GTIL and each member firm is a seperate legal
entity. Services are delivered by the member firms. GTIL does not provide
services to clients. GTIL and its member firms are not agents of, and do
not obligate, one another and are not liable for one another’s acts or omissions.
www.gti.org