Short-term forecasting models for the Finnish forest sector:: Lumber exports and sawlog demand

Due to liberalization of capital and currency markets, globalization of the forest industry, and developments in information technology and logistics, the world's forest product markets have become more interrelated, and they react ever more quickly to changes in macroeconomic conditions. Thus, short-term analysis and forecasting of forest product markets have also become more important. This article explains the framework for the system of short-term forecasting of the Finnish forest sector (MESU) using a case study. We present models and forecasts for short-term changes in the lumber import demand in Germany, how this affects forecasts for Finnish lumber exports, and in turn, how these exports affect forecasts for sawlog demand in Finland. Univariate and multivariate time series models are estimated using quarterly data from 1980:1 to 1996:4, and forecasts are computed for 1997:1 to 1998:4. Results show that the MESU system can be a helpful tool for forecasting short-term changes in the Finnish forest sector.