The outbreak of the novel coronavirus pandemic could shrink the Finnish economy up to five percent this year alone, business lobby-backed research organisation ETLA has warned.
According to ETLA, the Nordic nation's economy could contract between one and five percent this year. While its impact could still be minimised by concerted actions and intensive stimulus measures across Europe, the organisation is currently leaning toward the negative scenario.
“However, the most positive baseline scenario seems unlikely at the moment. We estimate that at the negative end of the scale (five percent contraction) seems highly likely now”, ETLA forecast chief Markku Lehmus said in a statement.
Tweet: Recent ETLA estimate released: Finland's GDP could contract up 5% this year due to the coronavirus pandemic.
According to the ETLA's estimates, economic activity will have plummeted by nearly 10 percent between April and June, before finally looking up again.
The projection is based on assessments of how the Chinese economy behaved during the peak of the coronavirus epidemic there, ETLA CEO Aki Kangasharju explained.
“According to these analyses, between January and February, China's economy shrank by up to 13 percent, but during March it already recovered. We assume that Europe and Finland will not adopt equally robust measures to prevent the spread of the virus, so the economy will not slow as much, but the impact of the virus will last longer”, Kangasharju explained.
ETLA also predicted that steps to quell the spread of COVID-19, the disease spread by the virus, will have major financial repercussions.
Extensive quarantines will lower overall work productivity, while the demand in industries like tourism, hospitality, and entertainment will plummet, ETLA predicted. One of the most striking examples is national carrier Finnair, which has slashed flight capacity by 90%, basically retreating to the airline's 1960s timetable.
Finland has already introduced a number of anti-crisis packages, including a state of emergency, followed by a closure of schools and national borders, as well as a $5.6 billion support package for businesses most affected by the outbreak. The action plan also includes major transport cuts and a limit on medical supply sales, in addition to a ban on public gatherings upwards of ten people.
So far, 319 COVID-19 cases have been recorded in Finland. However, as Director General of the National Institute for Health and Welfare (THL) Markku Tervahauta has warned, the actual number of those infected may be 20-30 times higher than the official estimate.
The coronavirus epidemic, which originated in the Chinese province of Hubei and was upgraded by the World Health Organisation to a pandemic, has infected close to 200,000 people in over 100 countries, with nearly 8,000 deaths and over 80,000 effectively recovered patients.