In 2001 the global economy experienced a severe slowdown which started in the United States and Japan spreading to Europe in the second half of the year. Due to recession on its main market, Finnish exports suffered from weak demand. Hence the volume of Finnish total exports dropped by 3 percent.
Lower exports and weak domestic demand hit the industrial production, which was 1 percent below the level achieved in the previous year.
As a result, in 2001 GDP grew by only 0.4 percent.
The strong downturn in the global economy, especially during the latter half of 2001, substantially reduced demand for forest products.
In Finland production in the forest sector fell by 12 percent in the fourth quarter of 2001 compared with the same period in 2000. For the year as a whole the production was down 7 percent.
Paper and paperboard production fell by 7.5 percent and pulp production by over 6 percent in 2001. Sawnwood production fell by about 5 percent and also plywood production was slightly reduced.
Capacity utilization in the paper industry averaged 88 percent compared with 95 percent in 2000.
Paper and paperboard production in Finland amounted to 12.5 million tonnes in 2001. This signified a drop of 1 million tonnes or about 7.5 percent from the previous year. The drop was significant for fine papers, down 16 percent. Production of magazine papers and newsprint also declined.
Production only rose in the group "Other papers", which includes sanitary papers and speciality papers.
Chemical pulp production was down nearly 8 percent and mechanical pulp 4 percent.
Sawnwood production totalled 12.7 million m3 in 2001. This was about 5 percent less than in 2000. Production of pine sawnwood remained at the level of the previous year, amounting to 6.2 million m3. Production of spruce sawnwood fell by 9 percent.
Plywood production totalled 1.14 million m3 in 2001. This was nearly 3 percent less than in 2000. Production during the fourth quarter was down 9 percent compared with the previous year. Production of birch plywood remained on the previous year's level while production of softwood plywood declined.
Due to the weak demand in the second half of 2001, forest industry exports fell 4 percent below the volumes of 2000.
The biggest drop, -6 percent, was in the exports of paper and board. As almost 90 percent of the production is exported, it is clear that the changes in production and exports are interlinked.
Exports of pulp amounted to 1.7 million t in 2001.
Sawn timber exports dropped 2 percent by volume. Prices of sawnwood were some 5 percent below those in the previous year.
The strong downward trend of pulp prices came to a halt at the end of 2001. On average, pulp prices dropped by about 20 percent.
However, prices for paper and paperboard on average were some 4 percent higher than in 2000.
Altogether, export revenues of the forest industry in Finland were about €45 billion in 2001, some 3 percent less than in 2000.
In spite of the global economic slowdown the turnover of the Finnish wood and paper industry companies grew by 7 percent exceeding €35 billion. Part of the growth was due to acquisitions, which increased the paper production capacity of the Finnish companies to a total of 36 million tonnes globally.
In 2001, the total profit of the Finnish companies was 8 percent of turnover, clearly down from the record level of 14 percent in 2000.
The current situation and short-term prospects of the global economy are still uncertain and this fairly dominates the outlook of the wood and paper industry.
However, there are some signs of recovery in the United States economy and, if these features continue, some upturn could be expected by mid-year. In Europe, the recovery is lagging behind and the upswing is not expected until the second half of 2002. In general, this year's global economic growth will remain weak.
Hence, the demand for forest products can be expected to recover gradually towards the end of the year, but major growth may not be seen until next year.