According to the Business Tendency Survey carried out by the Confederation of Finnish Industries in April, Finnish companies estimated that the business situation had been hit hard by coronavirus in spring 2020. Services were the worst hit at first. Business outlooks towards the summer are weak in all the main sectors.
“The coronavirus has rewritten the outlooks and we are now in deep water. This is the most sudden and widespread decline in companies’ business outlooks throughout the 55-year history of the Business Tendency Survey. The blow that affected the service sectors first now looks like it will spread to manufacturing and construction in the coming weeks. Hopefully, the situation will level off, as an investment recession would have a long-lasting impact on Finland and make it considerably harder to recover from the coronavirus crisis,” says Sami Pakarinen, Chief Economic Policy Advisor at the Confederation of Finnish Industries.
Business outlooks throughout the business community have plummeted to -59. The last time we saw such levels was in the recession of the 1990s. At that time, we saw a low of -75 at the end of 1990. The outlook is bleak in all the main sectors. Although the business situation in manufacturing and construction is currently better than in services, outlooks in these sectors have also deteriorated. Production, sales and employee expectations have also declined rapidly as a result of the rapid change in situation.
“The times are such that we need to look back over very long time series. We are facing a historic crisis, but we don’t yet know how deep it will be or how long it will last. We know that the economy in China has been suffering for three months now and in Finland it looks like the peak of the epidemic will be delayed. There is a danger that the crisis will also be prolonged in Finland. From the perspective of the expectations that drive the economy, the most important thing now is to try to restore confidence as soon as possible,” Pakarinen continues.
Coronavirus now having biggest impact on companies
The coronavirus has created supply problems through corporate supply chains and demand has also collapsed. Of the responding companies, 36% felt that insufficient demand was a problem. As many as 29% of respondents also mentioned another reason that was an obstacle to the growth of production and sales, which was, of course, the coronavirus. It is now of utmost importance to get the epidemic under control rapidly to get the economy back on track.
“The successful management of the coronavirus is now crucial for the domestic market so that we can start gradually opening up the economy. The outlook for manufacturing and construction has also weakened. It is important that, in addition to Finland, the economies of Finland’s most important export countries can recover,” says Jyri Häkämies, Director General of EK.
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 2020, the Confederation of Finnish Industries asked businesses to evaluate their business outlook for the first quarter of 2020. 1,210 companies employing over 250,000 people in Finland responded to the survey.