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OECD Economic Surveys: Finland 2012
OECD Publishing, February 2012, Pages: 118
The global outlook is weakening, slowing growth in Finland. The Finnish economy has still not recovered from the sharp 2008-09 recession and GDP remains about 3% below its mid-2008 level. Unemployment may start to increase again. Policymakers should cushion the downturn by strengthening active labour market policies. An even worse global outlook may materialise, however. Risks relating to the ongoing sovereign debt crisis in the euro area, and the weak health of the banking sector in many countries are significant.
While the budget deficit is small, current fiscal plans are not ambitious enough to deal with future fiscal challenges related to an ageing population. Raising the (minimum and maximum) retirement ages, improving incentives to work for older individuals and further tightening early-retirement schemes would increase labour supply and could lower fiscal costs sufficiently to address these long-term challenges. Enacting such reforms now would leave room for short-term fiscal stimulus if the economic slowdown turns out significantly worse than expected. Without major retirement reforms, significant further fiscal consolidation would soon be needed to deal with the costs of ageing.
OECD's 2012 Economic Survey of Finland examines recent economic developments, policies and prospects; examines what could be done to restart economic growth and includes a more detailed analysis of health care in Finland.
Assessment and recommendations
-Finland is being hit by the renewed global economic slowdown
-Fiscal policy has been prudent but long-term fiscal challenges remain
-Restarting the growth engine is becoming urgent with the drastic drop in productivity
-Greater efficiency and equity in the health care system would lower fiscal costs and improve health outcomes
-Annex A1. Progress in structural reform
Chapter 1. Restarting the growth engine
-Finland’s strong productivity performance started to weaken before the recession
-Rigidities hamper structural transformation and thus slow productivity growth
-Further deregulation, opening of markets and more competition would benefit especially service sector productivity
-Policies bearing on entrepreneurship, innovation, investment and R&D could be more efficient
Chapter 2. Enhancing efficiency and reducing inequalities in health care
-Health reform ranks high in the Finnish policy agenda
-The performance of the Finnish health care system has been mixed overall
-The highly decentralised health care system with multiple tracks and parallel financing contributes to inequality and inefficiency
-Policies to improve efficiency and equality while ensuring long-term sustainability
-Annex 2.A1. Some stylised facts about life satisfaction in Finland
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