The business cycle is improving and the outlook is brighter

According to the Business Tendency Survey carried out by the Confederation of Finnish Industries in April, Finnish companies estimated that the economic situation has improved during the spring. The economy will recover from the coronavirus crisis in the next few months, as expectations for an upturn in the business cycle have continued to rise.

“The Finnish economy will continue to pick up as we approach the summer. Vaccinations and the lifting of restrictions will help the service sector, which is still quite weak in many respects. The outlook is improving in all the main sectors. The outlook in construction, which has remained in a low cycle, is also clearly improving,” says Sami Pakarinen, Chief Economic Policy Advisor at the Confederation of Finnish Industries.

There is great variation in the ways in which the coronavirus pandemic has hit the economy. The differences between various sectors and individual businesses are still dramatic.

“In manufacturing, subsectors that have performed poorly, such as the forestry and technology industries, are enjoying a brighter outlook, whereas the outlook for the food sector is now, in turn, more subdued. There is no similar shift in services. Information and communication services and retail are still going strong, while tourism and restaurant services are still struggling,” Pakarinen analyses.

Problems with the availability of labour emerge again

Of the responding companies, 31% felt that insufficient demand was a problem. The second biggest problem is a shortage of labour, which was reported by as many as 21% of respondents. This is the result of the gradual decrease of the working-age population, which is increasingly reflected in the performance of businesses.

“The availability of skilled labour was a big problem even before the coronavirus pandemic, and it will be exacerbated when growth resumes. We now need credible decisions for speeding up permit processes for foreign labour. In addition, we need reforms in education to improve its relevance, to target more study places at the sectors in need of labour and to better prevent students from dropping out,” says Jyri Häkämies, Director General of the Confederation of Finnish Industries.

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 April 2021, the Confederation of Finnish Industries asked businesses to evaluate their business outlook for the first quarter of 2021. 1,305 companies employing about 270,000 people in Finland responded to the survey.