Finnish consumer confidence shows slight improvement, yet fewer eyeing property purchases

By admin On Jan 29, 2024

A customer examines used cars at a car dealership in Helsinki. LEHTIKUVA

Finnish consumer confidence saw a modest increase in January, with individuals expressing more optimistic views about their personal financial situations and the broader Finnish economy compared to both the previous month and the same period last year. Despite this uptick in optimism, consumers’ current assessment of their personal financial situation remained largely pessimistic. However, their outlook for their personal finances a year from now brightened, even as their expectations for the Finnish economy remained somewhat gloomy.

In January, 31% of consumers felt confident about the improvement of their personal financial situations, while only a fifth believed in an upturn for Finland’s economy over the next year. Forty percent, on the other hand, predicted a deterioration in the nation’s economic conditions.

The consumer confidence indicator stood at -9.1 in January, an improvement from -13.3 in December and -12.7 from the year before. “We ask about expectations for the economy a year in advance, so consumers clearly anticipate factors such as interest rates and price increases or the state of Finland’s economy to turn more favorable by then. Wages are slightly rising, and taxation is easing for some. Additionally, the start of the year often brings a bit of extra hopefulness regarding economic matters. Overall, though, confidence remains very weak,” explains Pertti Kangassalo, Senior Statistician at Statistics Finland.

Intentions among consumers to spend on durable goods remained extremely low in January, although there was a slight increase in purchasing plans compared to both the previous month and last year. Ten percent of consumers anticipated increasing their spending on durable goods over the next year.

Conversely, intentions to buy a house or apartment further declined in January, with only 10% of consumers considering such a purchase. “The interest in buying property was high during the COVID-19 years. However, as loan interest rates began to rise, consumers’ financial situations and purchasing power weakened, and economic uncertainty increased, enthusiasm for acquiring property dampened a couple of years ago. There was a brief uptick in purchasing intentions at the end of last year, possibly because it was the last chance for first-time buyers to make purchases without a transfer tax. The lack of positive factors influencing home buying in January means the near-record low in purchase intentions is not surprising,” Kangassalo notes.

Economic confidence was strongest in the capital region, where the confidence indicator reached -4.4. The weakest confidence was observed in other parts of Southern Finland, at -12.8. “Generally, the capital region has always had stronger confidence and brighter expectations than elsewhere, especially compared to Eastern Finland. The difference can be explained by factors such as education, socioeconomic status, employment, and income levels, which are better in the Helsinki area than in the rest of the country and rural areas. Additionally, the capital region has a higher population of young people, who are traditionally more optimistic about the economy and the future in general,” Kangassalo concludes.

Source: www.helsinkitimes.fi