The private sector consumption climate in Finland is improving this year and that will contribute to rising demand for consumer goods and industrial inputs through the remainder of this year.

High-end household spending will benefit from record-low interest rates and strong consumer confidence. At the outset of the second quarter of this year, mortgage interest rates hit a record low of 3.01 percent and they are likely to remain at or near that level through the remainder of the year.

As the second quarter of 2004 got underway, mortgage lending was up 16 percent from the level recorded a year earlier. That, in turn, contributed to strengthening demand for residential real estate as well as associated furnishings and fixtures. Demand in those categories should remain strong through the remainder of this year and into the first half of 2005.

Unemployment is gradually declining in Finland and that is boosting consumer confidence. A report released by Statistics Finland during the second quarter of this year showed that 33 percent of Finnish consumers expected the economic panorama to improve over the next 12 months while 17 percent expected economic deterioration. The same report showed that 77 percent consider this to be a favorable time for taking out a loan. The construction sector will benefit from strong housing demand and capital investment on the part of Finnish industry. Look for sales of construction materials to show year-on-year gains in the range of 5 to 10 percent for the remainder of this year.

Consumer attitudes favor increased sales of automobiles during the second half of 2004. During the first half of the year, growth in car sales peaked at nearly 12 percent year-on-year. Car sales growth will drop back below the 10 percent mark during the second half but healthy gains in excess of 5 percent should persist.

DEMOGRAPHIC CONTRACTION WILL IMPACT CONSUMPTION The population growth rate for Finland is slightly less than the regional average, although the birth rate of 11 per thousand...

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