Pedestrians in Helsinki on 8 July 2024. Despite a flurry of worrying economic news in recent weeks, the Finnish economy is poised to make a turn for the better, believes a director at the Confederation of Finnish Industries (EK). (Emmi Korhonen – Lehtikuva)
- Next Article Valtonen: If necessary, Finland is ready to evacuate peacekeepers from Lebanon
RECENT MONTHS have painted a somewhat confusing picture of the national economy in Finland, reports YLE.
Better-than-expected growth figures released in the spring fuelled optimism about an imminent turnaround, but in recent weeks the optimism has been stifled by news that bankruptcies remain high, employment is on the decline, consumers remain cautious and the stock market is underperforming.
The Helsinki Stock Exchange has performed poorly in recent years when compared markets in Europe and the US, YLE wrote on 23 July.
Sami Pakarinen, a director at the Confederation of Finnish Enterprises (EK), believes the economy is nonetheless on an upward trajectory.
“You get a bit of good news, at times a bit of worse news. And the bad news especially deal with employment, which reacts with a bit of delay to [changes] in output,” he analysed to YLE on Monday.
His optimism is rooted in a recent business sentiment survey carried out by EK. While the survey continues to point to a fairly difficult situation – especially in the construction industry – it found that confidence is on the rise in each of the three main sectors of construction, manufacturing and services.
“The overall indicator for economic outlook has crept up close to zero, indicating that the turnaround is underway,” said Pakarinen.
Juuso Vanhala, the acting head of forecasting at the Bank of Finland, interpreted the results similarly: even though the overall indicator remains below zero, it has improved markedly in recent months.
Last October, the outlook indicator stood at -59.9 for construction, -34.7 for manufacturing and -29.9 for services. In July, the indicator came in at -7.8 for construction, +3.4 for manufacturing and -3.0 for services.
The Bank of Finland’s June forecast points in the same direction: the economic recovery is underway, however slowly.
The mood among consumers is less excited, however. Statistics Finland on Monday revealed that its consumer confidence index stood at -7.2 in July, an improvement of 0.4 from the previous month and 1.6 from the previous year. The long-term average for the index is -2.5.
“It’s still difficult to tell when the turnaround will happen,” Päivi Puonti, the head of forecasting at Etla Economic Research, stated to YLE on Monday. “When it comes to consumers, we can see that at least the situation is no longer worsening. And when it comes to business confidence, we’ve seen the turnaround.”
The business sentiment survey found that muted demand has overtaken labour supply as the biggest inhibitor of business growth.
Vanhala said to the public broadcasting company that the improved labour supply bodes well for the upcoming recovery. The muted demand, in turn, is largely a domestic issue – an indication that the recovery of purchasing power that began last year has yet to embolden consumers.
“Households are still cautious. The tax hikes and cuts targeted at social benefits will cause a dent in the earnings of many households,” he noted.
Aleksi Teivainen – HT
- Next Article Valtonen: If necessary, Finland is ready to evacuate peacekeepers from Lebanon
Source: www.helsinkitimes.fi
