The national economy in Finland has been giving mixed signals recently, reports YLE.
In the spring, growth figures looked promising, making people hopeful for a quick recovery. However, recent news has dampened this optimism. Bankruptcies are still high, employment is falling, consumers are cautious, and the stock market isn't doing well.
The Helsinki Stock Exchange has not been performing well compared to other markets in Europe and the US, according to a report from 23 July by YLE.
Sami Pakarinen, a director at the Confederation of Finnish Enterprises (EK), is still optimistic about the economy's direction. He explained that while there is some good news, bad news, especially about employment, tends to follow changes in economic output with a delay.
Pakarinen's optimism comes from a recent business sentiment survey by EK. Although the situation is still tough, especially in construction, confidence is increasing in construction, manufacturing, and services.
“The overall economic outlook indicator is almost at zero, suggesting that a recovery is beginning,” said Pakarinen.
Juuso Vanhala, the acting head of forecasting at the Bank of Finland, agrees. Even though the overall indicator is still below zero, it has improved significantly in recent months.
In October, the outlook indicator was very low: -59.9 for construction, -34.7 for manufacturing, and -29.9 for services. By July, it had improved to -7.8 for construction, +3.4 for manufacturing, and -3.0 for services.
The Bank of Finland’s June forecast also shows a slow economic recovery.
However, consumers are less optimistic. Statistics Finland reported that the consumer confidence index was -7.2 in July, a slight improvement from the previous month and year. The long-term average for the index is -2.5.
“It’s hard to predict when the recovery will happen,” said Päivi Puonti, head of forecasting at Etla Economic Research, to YLE. “At least the situation isn’t getting worse for consumers, and business confidence is improving.”
The business survey also found that low demand is now the biggest challenge for business growth, not labor supply.
Vanhala mentioned that better labor supply is a positive sign for recovery. However, low demand is a domestic issue, indicating that consumers are still not spending confidently, despite a recovery in purchasing power starting last year.
“Households are still being careful with spending. Tax increases and cuts to social benefits will reduce income for many households,” he noted.
Aleksi Teivainen – HT
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