Kainuu’s economic growth outpaces national decline despite recession pressures

Kainuu has sustained economic growth at the top of Finland’s regional rankings for over a decade, defying the national downturn, according to a report by national broadcaster Yle. While Finland’s broader economy contracts, the region’s expansion—driven by data center investments, tourism, and industrial projects—shows no signs of slowing, though local leaders argue even greater potential remains untapped.

The region’s growth engines include a series of large-scale data center projects in Kajaani, where billions in private and public investment continue to flow despite recession warnings. Tourism, anchored by Vuokatti’s resorts, has also thrived, alongside mining operations like Terrafame, machinery workshops, and rail equipment manufacturer Skoda Transtech, which currently faces financial difficulties. Unemployment in Kainuu is rising but at a slower rate than the national average.

State authorities are preparing to designate Kajaani as a special economic zone to further bolster the data center ecosystem, a move that would unlock additional incentives for businesses. Most major projects and companies are concentrated in the Kajaani sub-region—covering Kajaani, Sotkamo, and Paltamo—but surrounding municipalities are also pushing ambitious initiatives. In Suomussalmi, the Kiannon Kuohut spa hotel, acquired a year ago by first-time hospitality entrepreneur Joni Tolonen, is undergoing renovations to modernize its offerings. Tolonen admitted initial doubts about the purchase but said the past year had provided invaluable experience. “Good ideas will always find funding,” he noted, though he suggested more support could be directed toward helping entrepreneurs navigate financing.

Mari Möttönen, CEO of Kainuu Entrepreneurs, acknowledged Tolonen’s concerns about skills gaps among small business owners. She pointed to ongoing efforts through Business Kainuu to upskill entrepreneurs, citing a 2025 survey of over 200 local firms where respondents rated their business outlook at an average of 7.2 on a 1–10 scale—a figure that surprised even her. “The range of responses was wide, but the overall sentiment was clearly positive,” Möttönen said. She noted that 95% of Kainuu’s businesses are micro-enterprises (under 10 employees), half of which are sole proprietorships, making them particularly vulnerable to economic fluctuations. “Service-sector firms feel the downturn first when consumers cut spending.”

Local governments are actively partnering with businesses to sustain momentum. Paltamo, named Kainuu’s most dynamic municipality in 2025, exemplifies this collaboration. Mayor Pasi Ahoniemi attributed the recognition to a collective “pro-business mindset” and streamlined bureaucracy. “It’s effortless when you approach things with the right attitude—no jealousy, just a shared belief that Kainuu is a great place to invest, grow, and live,” he said. Critical tools include proactive land-use planning, permit efficiency, and rapid response to business needs, all of which have gained urgency since Finland’s well-being services reform shifted some economic development responsibilities to municipalities.

For Katera Steel, a Kajaani-based machinery workshop, the region’s growth provided the impetus to build new facilities after its lease expired. CEO Mikko Julkunen said the company—employing 40 people—weighed shutting down or relocating before committing to expansion. “We can’t just wait for opportunities; we have to create them,” he said, praising Kainuu’s business networks but criticizing banks for insufficient risk-taking. “If I had a magic wand, I’d change that.”

Despite a decade of above-average performance, Kainuu’s leaders insist the region is far from peaking. With data centers anchoring a broader industrial ecosystem and local governments aligning policies to reduce barriers, the focus remains on scaling up—transforming a once-declining area into a hub of sustained investment.