FINLAND’S Finance Minister Jutta Urpilainen recently suggested our economy is in as bad a shape as it was during the 1990s depression. Is it as truly as bad as that?
COMPARING our situation now with the early 1990s is a tricky endeavour, simply because the economy has changed so much. But there are some interesting statistics we can use to draw comparisons. Urpilainen has one stat that reinforces her statement: the economy recovered quicker in the 1990s than it is doing now. Five years after the crisis had begun in 1990, GDP per capita had grown 6.9%. But five years after the Great Recession began in 2007, our GDP per capita has only grown 5.9%.
BUT other statistics show that this recession is not as bad as the last one. For instance, the five-year average inflation rate this time around is 2.3%, but it was slightly higher in the 1990s at 2.9%. When it comes to the number of people who have lost their jobs, there is no comparison. Unemployment peaked at 17% in 1994, while during the 2000s recession it only reached about 9%, not counting seasonal jumps.
A BIG difference between then and now is the source of the recession. In the 1990s, it was mostly a Nordic phenomenon, brought on by our own real estate bubble and banking crisis which was exacerbated by the fall of the Soviet Union as a trading partner. We had a very sharp fall, and then the economy strongly recovered, although it took many years to return to pre-crisis levels.
David J. Cord
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