Finns Display Record Low Confidence in Economy Amid Growing Uncertainty

According to a recent estimate by Finnish entrepreneurs, the Nordic country's economy will slow down to the point of recession. The report also stressed a worsening shortage of materials and energy, which results in higher costs especially in the construction industry.

Since the start of the conflict in Ukraine, Finns' confidence in the economy has plummeted to the lowest level on record, Statistics Finland reported.

Some 81 percent of consumers in Finland believe the country's economy is in a worse state than a year ago, compared with only six percent who felt it was better, according to the results of Statistics Finland's latest survey of consumer sentiment.

Consumers' buying enthusiasm has decreased drastically since last year. Only a tenth of the respondents considered now to be a good time for major purchases, and fewer than before are thinking about buying a car. Nearly half the respondents, 42 percent, intended to reduce their spending further in the coming year.

Consumers' expectations concerning Finland's rate of inflation over the course of the next 12 months rose to their highest levels since the poll was first taken in 1995.

The recent figures were no surprise, as confidence numbers have been slumping for months in a row, Juho Keskinen, economist at the Finnish Mortgage Federation, told the newspaper Hufvudstadsbladet. He called the confidence figures an “important grassroots indicator of where things are going in the economy”.

“It is the people themselves who know best how their economy is changing,” Keskinen said.

The confidence figures also indicated that consumers are more worried about the spectre of unemployment than before, despite the actual situation on the labor market being comparatively strong. However, economists estimate that the number of available jobs is likely to decline, albeit with some delay. At the same time, the chances to save have deteriorated during the summer.

Fittingly, a similar development was reflected in a fresh assessment by the Confederation of Finnish Industries (EK), which said that Finland was affected by an increasingly uncertain global economic outlook. In almost all industries, economic indicators have fallen to a similarly low level as during the financial, eurozone and COVID crises, or even lower.

“According to the companies' recent estimates, Finland's economy will slow down. A recession cannot be ruled out,” EK director Sami Pakarinen told Hufvudstadsbladet, stressing an increasing shortage of materials and energy, which will result in higher costs, especially in the construction industry.

According to Pakarinen, industries that depend on consumer confidence are the worst affected. The recession is already a fact in the construction industry, which is “reaching a turning point”.

Earlier, the combination of rocketing food and energy prices alongside the possibility of power cuts and fuel shortages have spurred forecasts of recession across the European continent and the western world.