OECD Economic Outlook 69 - Biblioteca Hegoa

92 - OECD Economic Outlook 69
Weaker export demand should lead to a substantial decline in economic growth from 5¾ per cent in 2000 to around
3¾ per cent in 2002. Labour market tensions are, nevertheless, likely to remain. With oil prices falling gradually, headline
inflation should decelerate from 3¼ per cent in 2000 to slightly above 2 per cent in 2002.
A large part of the sharp improvement in the government budget in 2000 was due to exceptional revenue rises. These
should not be used to permanently increase government spending and the government should stick to its medium-term
budgetary framework. Though the tax cuts in 2001 and 2002 will strengthen the supply side, other structural policy
measures are also needed to ensure a further fall in unemployment.
Surging exports spurred growth
and labour market tensions
have intensified
The government surplus rose
steeply due to an exceptional
increase in tax revenues
Finland
Boosted primarily by robust external demand – particularly for information
and communication technology (ICT) products – output growth accelerated by
1.5 percentage points to 5.7 per cent in 2000. Production of the electronic equipment
industry increased by a third. Nevertheless, unemployment fell only a little to
9.8 per cent, which is still above the euro area average. Vacancies, however, soared
by 20 per cent in the twelve months to March 2001, pointing to increasing labour
market tensions despite still high unemployment. In light of this, the pay rises
agreed in the central wage settlement for 2001 and 2002 are moderate, even if
stronger than elsewhere in the euro area. With oil prices falling, inflation (measured
by the harmonised consumer price index) has decelerated from the peak of
3.4 per cent in October 2000 to 2.5 per cent in March 2001, marginally below the
euro area average.
Direct tax revenues rose by a quarter in 2000 due to extraordinarily high one-off
income tax receipts from share options as well as large increases in corporate taxes
which were boosted by record profits, corporate restructuring and a 1 percentage
point increase in the corporate tax rate. As a consequence, the general government
surplus surged by 4.9 percentage points to 6.7 per cent of GDP. The surplus will fall
somewhat as tax receipts on stock options will drop substantially in 2001, corporate
profits are set to decline and income taxes are cut by 0.7 and 0.5 per cent of GDP
in 2001 and 2002, respectively. Overall, the fiscal stance will become looser.
Per cent Per cent
60
13
50
Finland
Euro area
12
40
30
11
20
10
10
9
0
Finland
Electronic equipment production slows down1 down1 down1 Unemployment2 Unemployment2 Unemployment2 falls, but is still high
1998 99 2000
01 1998 99 2000
01
1. Electronic, electrical and optical equipment; trend series, year-on-year percentage change.
2. Standardised unemployment rate.
Sources: Statistics Finland, Eurostat and OECD.
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