Economy hit hard, business outlooks collapse

Finnish companies are of the view that the business situation in the country had been hit hard by coronavirus in spring 2020, reports the Business Tendency Survey carried out by the Confederation of Finnish Industries (EK) in April.

Services were the worst hit at first. Business outlooks towards the summer are weak in all the main sectors, said an EK press release on Monday.

“The coronavirus has rewritten the outlooks and we are now in deep water. This is the most sudden and widespread decline in companies’ business outlooks throughout the 55-year history of the Business Tendency Survey,” said EK Chief Economic Policy Advisor Sami Pakarinen.

He said the blow that first affected the service sectors now looks like it will spread to manufacturing and construction in the coming weeks.

Business outlooks throughout the business community have plummeted to minus 59. The last time they saw such levels was during the recession of the 1990s. At that time, at the end of 1990, it nosedived to as low a level as minus 75.

The outlook is bleak in all the main sectors. Although the business situation in manufacturing and construction is currently better than that in services, outlooks in these sectors have also deteriorated.

Production, sales and employee expectations have also declined rapidly as a result of the rapid change in the situation.

“The times are such that we need to look back over very long time series. We are facing a historic crisis, but we don’t yet know how deep it will be or how long it will last. We know that the economy in China has been suffering for three months now and in Finland it looks like the peak of the epidemic will be delayed. There is a danger that the crisis will be prolonged in Finland, too. From the perspective of the expectations that drive the economy, the most important thing now is to try to restore confidence as soon as possible,” Pakarinen added.

According to the survey report, the coronavirus has created problems across corporate supply chains and demand has dwindled, too. Of the responding companies, 36% felt that insufficient demand was a problem; while as many as 29% of them also mentioned another factor, which, of course, is the coronavirus, as an obstacle to growth in production and sales. It is now of utmost importance to bring the epidemic under control rapidly in order to get the economy back on track.

“The successful management of the coronavirus is now crucial for the domestic market so that we can start gradually opening up the economy. The outlook for manufacturing and construction has also weakened. It is important that, in addition to Finland, the economies of Finland’s most important export countries can recover,” said EK Director-General Jyri Häkämies.

The Business Tendency Survey is conducted by the EK four times a year. The study has been carried out regularly since 1966.

In April 2020, the EK asked businesses to evaluate their business outlook for the first quarter of 2020. A total of 1,210 companies employing over 250,000 people in Finland responded to the survey.