Finns' Consumer Confidence Hits Record Low as Recession Looms

Respondents to the survey by Statistics Finland voiced concerns about their own financial situation and the threat of redundancy amid a pessimistic outlook fueled by an ongoing energy crisis and falling purchasing power.

Confidence among Finnish consumers regarding their own economic outlook has fallen to a new low, according to Statistics Finland.

The confidence indicator reached its nadir since the consumer confidence started being measured in 1995, eclipsing the previous low reached in September this year.

In an accompanying press release, Statistics Finland noted that consumers considered their own financial situation to have weakened “from good to average”. “At the same time, the personal threat of unemployment was considered to have increased,” it added.

Respondents' intentions to make lasting purchases also hit a record low with few Finns planning to buy a new car or home. Up to 53 percent of consumers plan to reduce their spending on durable goods over the next 12 months. Furthermore, some 38 percent of Finns argued that the state of their personal finances is worse than it was a year ago.

The expectations for the nation’s economy remained very weak as well. According to the Confederation of Finnish Industries (EK), the biggest slump was in retail.

This comes as the Central Bank of Finland has issued forecasts of recession. According to the bank, the Finnish economy is set to contract by 0.5 percent as the cost of living surges and the energy crisis is exacerbated by the conflict in Ukraine. Furthermore, in the next few years, public spending is expected to exceed revenues, which is why the public debt-to-GDP ratio will rise considerably from 2024 onwards, reaching 75 percent by the end of 2025.

The Taxpayers Association of Finland warned that people's purchasing power is likely to weaken next year as well. According to the association's forecast, the purchasing power of a middle-income earner will decrease in 2023 by about 0.2 percent, as wages will fall behind the pace of inflation. It further noted that if inflation surges higher than expected next year, people's purchasing power will weaken more than the present forecast.

Finland’s mounting crisis, largely in line with that of the eurozone, has been driven by the EU’s self-harming “punishment” against Russia and its energy because of its special operation in Ukraine. The Finnish economy has suffered heavily from Helsinki’s own trade decisions as well, as a number of Finnish companies have left Russia, incurring losses. The loss of neighboring Russian markets will leave a massive trade gap. Furthermore, according to various estimates, the Nordic nation may annually lose more than 2 billion euros ($2.1Bln) in revenues from Russian tourists.

Yet another instance of a branch suffering from the Finnish and EU sanctions against Russia which have harmed the EU countries more than they have hurt Moscow is the chemical industry with Finnish chemical companies struggling with the high energy prices. More redundancies are anticipated as production falls further.