Last updated 18/06/2020 - 07:51
Business outlook is very poor
The economic situation in Finland has started to decline sharply. In January, the economy was still expected to grow, but now projections regarding Finland point to a five or, at worst, ten per cent drop in overall production. The impact of the coronavirus is also visible in the results of the Business Tendency Survey by the Confederation of Finnish Industries (EK). Both the economic conditions and the business outlook are poor in all main industries. The coronavirus has hit services especially hard, but manufacturing and construction are also facing an increasingly difficult situation.
Manufacturing and construction
According to the Business Tendency Survey conducted by the Confederation of Finnish Industries (EK) in April 2020, companies in the main industries of manufacturing and construction in Uusimaa estimate that economic conditions have weakened considerably. During early spring 2020, their estimates of economic conditions became negative due to the coronavirus pandemic. In April, the balance figure describing the companies’ current situation was -10 when in January the corresponding indicator was still 7. In addition, business outlook, an estimate of the future, downright crashed. The business outlook balance indicator was -61 in April, compared to -1 in the January survey. In Uusimaa, prospects are even slightly worse than the national average. In other words, the current situation of companies in the industry is considered fairly poor and companies’ future expectations are very pessimistic.
The entire country’s manufacturing companies’ business outlook balance indicator was -49 in the April survey, compared to -15 in January. Manufacturing companies’ production has declined during the start of the year and production expectations for the coming months are low. Order books are below the normal level even as the number of new orders that manufacturing companies received climbed towards its usual level during the early spring. Export orders in particular have remained low. The changes in order books sets expectations for gradual decline in demand, and manufacturing is not expected to experience a coronavirus shock as sudden as the one the service sector faced.
Construction companies in the entire country assessed that their economic conditions weakened during the spring. Construction would have declined even without the coronavirus, at the end of a long upward economic trend. The balance figure for current situation was -10 in April, when in January it was still +3. In the construction industry, order books dropped below the average level. Construction of new residential buildings is declining from a very high level. A reduction in new construction permits also indicates a continued downturn even with low interest levels still supporting production in the sector.