1. What does the Baltic Sea region mean for the Finnish economy ? Kari Liuhto Director Centrum Balticum Professor, Director Pan-European Institute University of Turku Turku, 23.5.2012

2. Global economy during past 2000 years (% share of global GDP) China Japan India Other Asia Western Europe Eastern Europe & Russia USA Latin America Africa Russia’s share in the global economy 23% of gas reserves 6% of oil reserves 4% of military expenditure 3% of GDP 3% of trade 2% of foreign direct investment 2% of population

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

4. … despite Chinafication, countries around Baltic Sea are heavily inter-dependent Trade inter-dependency

5. Germany: economic magnet of BSR Russia: major supplier of raw materials and potential consumer market Blue = stake of BSR trade

6. Investment inter-dependency

7. To FinlandFrom Finland (inward)(outward) Foreign tourismOver 50%Over 50% (nights spend)esp. from Russiaesp. to Estonia Immigrationc. 50% c. 50% (2000-2010)esp. Swe,Rus,Estesp. Sweden Foreign investmentc. 70%c. 40% esp. Swedenesp. Sweden Foreign tradeOver 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

8. 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% 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%

9. 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% 1% / 1% 4% / 6% 2% / 3% 16% / 25% 4% / 6%

10. 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% / 1% 6% / 5% 6% / 1% 52% / 25% 1% / 1% Holland 16% / 15% Luxemburg 5% / 2% Belgium 2% / 22% USA 1% / 7% China 0% / 4%

11. 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

12. 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 GDPgrowth +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

13. 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.

14. Energy consumption differs in the BSR (Primary energy consumption in 2010) OilSolid fossil fuels Natural gas Nuclear energy RenewablesOtherTotal (mtoe) Denmark38 %20 %22 % 0 %20 % 1 % 19,9 Estonia13 %69 % 9 % 0 % 7 % 2 % 5,4 Finland27 %18 %11 %16 %25 % 3 % 36,1 Germany33 %23 %22 %11 % 9 % 2 % 335,4 Iceland26 % 3 % 0 % 72 % 0 % 3,9 Latvia31 % 2 %31 % 0 %25 %10 % 4,8 Lithuania37 % 3 %36 % 0 %16 % 9 % 7,0 Norway26 % 1 % 9 % 0 %64 % 0 % 41,8 Poland25 %55 %13 % 0 % 8 % 0 % 101,5 Russia21 %14 %54 % 6 % 0 % 690,9 Sweden30 % 4 % 3 %27 %35 % 0 % 53,0 EU35 %16 %25 %14 %10 % 1 %1760,1 Belarus27 %< 1 %73 % 0 %< 1 % 0 % 24,4 Ukraine10 %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 % is Finland’s total energy consum- ption

15. We should do together everything to preserve the Baltic Sea unpolluted

16. Welcome to the National Baltic Sea Forum to be held in Turku on June 7-8 th, 2012 More information: www.centrumbalticum.org