According to EK’s Business Tendency Survey, the Finnish economy is in recession


The global economy is currently under exceptionally high stress. This uncertainty is also readily ref-lected in the Finnish economy. According to the Confederation of Finnish Industries’ October Business Tendency Survey, the outlooks of Finnish companies have worsened to crisis levels.

“The Finnish economy is now in recession. How long and deep the recession will be remains to be seen. Geopolitical tensions and the war in Europe are sustaining an exceptionally high level of uncertainty. On the other hand, news that Europe’s natural gas reserves are filling up is a ray of light amidst the gloom. The direction that the German economy takes will indicate Finland’s path, too,” says Sami Pakarinen, Director at the Confederation of Finnish Industries.

The deterioration in the situation is also reflected in companies’ expectations regarding production and sales performance. The situation was somewhat sustainable in the early autumn, but demand issues have now become the principal obstacle to business growth.

“The rise in costs and declining demand are hurting profitability. Employment growth expectations are also waning, a significant proportion of companies are already planning lay-offs, and the labour shortage has already started to ease slightly. At the same time, companies had responded to supply chain issues by increasing stocks, but this demand is also declining,” Pakarinen says.

All main sectors have weakened, but there are differences

The fluctuations of the global economy are palpable in the daily life of export companies. The actions taken by central banks to fight inflation are having a significant impact on construction, and the decline in consumer confidence is hurting services.

“The weakening in order books is evident in manufacturing, and the rapid rise of interest rates and increase in the supply of housing are slowing construction. Consumers’ purchasing decisions are exerting negative pressure on services, instead of supporting growth as was expected. Even though consumer confidence has collapsed and is historically low, households are still holding up. The big question is how long this will last once employment starts to decline,” says Pakarinen.

EK Business Tendency Survey
The Business Tendency Survey is published four times a year by the Confederation of Finnish Industries (EK). The survey has been carried out regularly since 1966. It is part of the European Commission’s Joint Harmonised EU Programme of Business and Consumer Surveys, which is partially funded by the EU. The survey concerns activity in Finland. In October 2022, the Confederation of Finnish Industries asked businesses to evaluate their business outlook for the third quarter of 2022. A total of 1,128 companies employing about 235,000 people in Finland responded to the survey.