SME outlook plummets following coronavirus

This year has been exceptionally difficult for SMEs due to the crisis caused by the coronavirus epidemic, according to the SME Barometer on the expectations of small and medium-sized enterprises for near-term economic development, published on Wednesday.

The SME Barometer said that the balance figure for business outlook fell by 20 from the spring, said a press release of the Ministry of Economic Affairs and Employment.

“The coronavirus crisis has had remarkably dissimilar impacts on companies and sectors. Similarly, a wide range of policy measures has been implemented to mitigate the consequences of the crisis. The results of the SME Barometer widely reflect the effects of the crisis and the continuing uncertainty, but fortunately they also show faith in the future,” said Minister of Economic Affairs Mika Lintilä.

The SME Barometer is published twice a year by the Federation of Finnish Enterprises, Finnvera and the Ministry of Economic Affairs and Employment. This time, 5,100 companies responded to the survey.

The balance figure for business outlook fell by 20 from the spring

“The change is exceptional; we haven’t seen a change this quick and dramatic since the financial crisis. Fortunately, the slump is not quite as deep this time,” said Petri Malinen, Economist at the Federation of Finnish Enterprises.

The previous SME Barometer was published just before the coronavirus spread to Finland. At that time, 17% of the respondents predicted a downward economic trend while 26% believed the opposite. The coronavirus crisis changed everything: 32% of small and medium-sized enterprises now believe that the economic conditions will deteriorate and 21% expect them to improve over the next 12 months.

Expectations regarding the development of turnover fell sharply: The balance figure was down by 24 from the spring barometer to minus two.

“This is an exceptionally low value, but fortunately still slightly higher than during the financial crisis,” Malinen said.

SMEs expect to significantly cut their investments in the near future. In all main sectors, companies planning to reduce their investments outnumber those planning to increase them.

“The poor result indicates an exceptionally high level of uncertainty in terms of economic growth and the business environment,” Malinen said.

Although the economy has shrunk and the future outlook is exceptionally uncertain, small and medium-sized enterprises do not expect to significantly reduce the number of employees.

However, the fact that the balance figure of expectations fell by 11 from the spring to minus two shows that the situation is very difficult.

The exceptional spring has caused a sharp deterioration in the cash funds of SMEs in the first half of the year. In this survey, 19% of companies reported difficulties making payments in the past three months.