Business: Trimming the Finnmark

For the seventh time since World War II, Finland has devalued its currency, this time by nearly one-third. In the future, it will require 4.2 Finn-marks, instead of 3.2, to equal a U.S. dollar. The move was received with resignation. Jested Kari Suomalainen, a leading cartoonist: “First we had the minicar, then we had the miniskirt, and now we have the minimark.”

Devaluation was the inevitable answer to chronic economic ills. Last year Finland’s gross national product was $8.6 billion, showing a mere 2.2% increase over the previous year, and well down from the average 5% growth rate during 1960-65. More than a fifth of the national income comes from exports, mostly to Western Europe. Slackening economies, particularly in Great Britain and West Germany, have cut Finland’s export earnings. Meanwhile despite restrictive government policies and tight credit, imports remain high and the trade gap is running at $220 million for the second consecutive year. Unemployment has gone up (2.5% of the work force), production has fallen, and investment is at a virtual standstill. Forest products—including paper and pulp—which employ over 20% of the work force and account for two-thirds of Finnish exports, are badly squeezed. Timber owners, mostly small farmers, are holding out for higher prices. Some mills closed down this year, others are working at insignificant margins or at a loss. “Against this background it would have been difficult if not downright impossible to tighten credit policy further,” said Bank of Finland Governor Klaus Waris.