what does the baltic sea region mean for the finnish economy ? kari liuhto director centrum balticum...

What does the Baltic Sea region mean for the Finnish economy ?

Kari LiuhtoDirector Centrum Balticum

Professor, DirectorPan-European InstituteUniversity of Turku

Turku, 23.5.2012

DISTRIBUZIONE % PIL MONDIALE PER AREA DALL'ANNO ZERO A FINE MILLENNIO SCORSO

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

100,0

0 1000 1500 1820 1870 1913 1950 1973 1998

Cina Giappone India Altri Paesi asiatici Europa Occidentale Europa Orientale & Russia USA America Latina Africa

Global economy during past 2000 years (% share of global GDP)

China

Japan

India

Other Asia

Western Europe

Eastern Europe & Russia

USA

Latin America

AfricaRussia’s sharein the global economy

23% of gas reserves

6% of oil reserves

4% of military expenditure

3% of GDP

3% of trade

2% of foreign directinvestment

2% of population

China’s return to global superpower is fact, but …

… despite Chinafication, countries around Baltic Sea are heavily inter-dependent

Trade inter-dependency

Germany: economic magnet of BSR Russia: major supplier of

raw materials and potential consumer market

Blue = stake of BSR trade

Investment inter-dependency

To Finland From Finland(inward) (outward)

Foreign tourism Over 50% Over 50%(nights spend) esp. from Russia esp. to Estonia

Immigration c. 50% c. 50%(2000-2010) esp. Swe,Rus,Est esp. Sweden

Foreign investment c. 70% c. 40%esp. Sweden esp. Sweden

Foreign trade Over 50% Over 40% esp. Russia esp. Ger,Swe,Rus

= Imports = Exports

Over 80% of the Finnish foreign trade transported via the Baltic Sea – restrictions of CO2 emissions of maritime transportation 2015 onwards = extra bill for Finland € 600-1200 mn

Finland and the Baltic Sea region

Foreign tourism(ingoming to Finland / outgoing from Finland)

5 million / 4 million in 2010

Sources: MEK 2012; Statistics Finland 2012

21% / 5%4% / 23%

1% / 1%

1% / 1%

1% / 1%

10% / 6%

2% / 1%

10% / 12%3% / 2%

EU 55% / 77%

UK 8% / 5% France 4% / 3%USA 4% / 1%…Japan 3% / nd…China 2% / nd

Spain 2% / 10%

Finland and migration(inward flows to Finland / outward flows from Finland)

243,000 / 141,000 during 2000-2010

Source: Statistics Finland 2012

11% / 2%11% / 5%

0% / 0%

0% / 0%

1% / 1%

4% / 6%

2% / 3%

16% / 25%4% / 6%

Finland’s foreign direct investment stock(inward / outward)

€ 64 bn / € 102 bn in 2010

Source: Bank of Finland 2012

1% / 3%0% / 1%

0% / 0%

0% / 0%

0% / 1%

6% / 5%

6% / 1%

52% / 25%1% / 1%

Holland 16% / 15% Luxemburg 5% / 2%Belgium 2% / 22%USA 1% / 7%China 0% / 4%

Finland’s foreign trade(imports / exports)

€ 60 bn / € 57 bn in 2011

Source: Customs Finland 2012

19% / 9%3% / 2%

0% / 1%

1% / 1%

2% / 3%

12% / 10%

Growth c. 8%

2% / 2%

10% / 12%

Growth over 13%

3% / 3%

Growth 18%

EU 52% / 56%China 7% / 5%Holland 5% / 7% USA 4% / 5%UK 3% / 5%France 3% / 3%Italy 3% / 2%Spain 1% / 2%

Trade growth around 11%

Finland’s largest trade deficit is

with Russia € 6 bn= deficit with

Russia is bigger than our exports

to Germany

19% / 9%3% / 2%

0% / 1%

1% / 1%

2% / 3%

13% / 10%

Growth c. 10%

2% / 2%

10% / 12%

Growth over 15%

3% / 3%

Growth over 20%

Finland’s 3 main export markets in 2012 + China & USA

GDP growth +1.9% +1.0% +4.5% +8.6% +1.3%

(overall development)

Gross fixed investment +4.4% +1.8% +7.5% +8.7% +4.7%growth(demand for investment goods)

Private consumption +2.4% +0.3% +4.0% +9.4% +1.4%(demand for consumption goods)

Import growth +4.1% +4.6% +9.4% +9.9% +3.4%

(demand for foreign goods) Source: Finpro 2012

The integration of the EU and Russia via the Baltic Sea region co-operation

Russia’s Presidency in the CBSS(7/2012-6/2013), some possible actions

1) Common Baltic Sea Days between the EU and Russia

2) National BSR Forum in Russia, back-to-back with the Economic Forum of St. Petersburg

3) BSR communication unit in Russia

4) St. Petersburg / Kaliningrad to apply the status of the Capital of the European Culture

5) Nework co-operation:investment agencies, innovation incubators,environmental units, etc.

Energy consumption differs in the BSR (Primary energy consumption in 2010)

Oil Solid fossil fuels

Natural gas

Nuclear energy

Renewables Other Total (mtoe)

Denmark 38 % 20 % 22 % 0 % 20 % 1 % 19,9Estonia 13 % 69 % 9 % 0 % 7 % 2 % 5,4Finland 27 % 18 % 11 % 16 % 25 % 3 % 36,1Germany 33 % 23 % 22 % 11 % 9 % 2 % 335,4Iceland 26 % 3 % 0 % 0 % 72 % 0 % 3,9Latvia 31 % 2 % 31 % 0 % 25 % 10 % 4,8Lithuania 37 % 3 % 36 % 0 % 16 % 9 % 7,0Norway 26 % 1 % 9 % 0 % 64 % 0 % 41,8Poland 25 % 55 % 13 % 0 % 8 % 0 % 101,5Russia 21 % 14 % 54 % 6 % 6 % 0 % 690,9Sweden 30 % 4 % 3 % 27 % 35 % 0 % 53,0

EU 35 % 16 % 25 % 14 % 10 % 1 % 1760,1Belarus 27 % < 1 % 73 % 0 % < 1 % 0 % 24,4Ukraine 10 % 31 % 40 % 17 % 2 % 0 % 118,0

Sources: BP 2011; Eurogas 2011; Eurostat 2012; World Bank 2012

34% in 2009 -

comeback by 2020

0 % by 2022 ?

11 % isFinland’s

totalenergy

consum-ption

We should do together everything to preserve the Baltic Sea unpolluted

Welcome to the National Baltic SeaForum to be held in Turku

on June 7-8th, 2012

More information:

www.centrumbalticum.org