Economy to take months to recover from coronavirus shock

Finnish companies estimated that the poor economic trend had continued late last year and early this year, according to the Business Tendency Survey carried out by the Confederation of Finnish Industries (EK) in January.

The recovery of the economy from the coronavirus shock will continue in the next few months, anticipating an upturn in the business cycle, said the EK in a press release on Wednesday.

“The downturn in the business cycle has persisted but the outlook is now clearly better compared to the situation last autumn. The coronavirus pandemic is still the biggest factor affecting the economic forecasts for the coming months, but the expected upturn in the business cycle would suggest that we can see light at the end of the tunnel. Whether the forecasts prove realistic depends entirely on the pace at which the vaccines are rolled out,” said EK Chief Policy Advisor Sami Pakarinen.

Business outlooks throughout the business community had increased to minus 5 from minus 31 in October.

The business outlook in manufacturing, in particular, has improved from last autumn. Services, which have been particularly hard hit by the pandemic, also show a brighter outlook.

“The bounce-back of the Finnish economy will take place hand in hand with the global economy. In manufacturing, the worst seems to be over, while services are still having serious problems. The difficulties in construction had begun before the coronavirus pandemic began and the sector is still not seeing any respite. The differences between different sectors and individual businesses can still be quite dramatic,” added Pakarinen.

Of the responding companies, 38% felt that insufficient demand was a problem. The second biggest problem is shortage of labour. Despite the downturn in the business cycle, 14% of the respondents reported that finding qualified staff was a hindrance. This is the result of the gradual decrease of the working-age population, which is increasingly reflected in the performance of businesses.

The Business Tendency Survey is published four times a year by the EK. A Total of 1,391 companies employing nearly 250,000 people in Finland responded to the survey conducted in January 2021.