Its consumer confidence survey found that three-quarters of the public believe the national economy is worse off than it was a year ago. A third of the survey respondents also estimated that their own financial situation has eroded since April 2023.
Finnish consumers were also pessimistic about the employment situation, with 11 per cent expecting to see a decrease and 58 per cent an increase in unemployment in the next 12 months. About 20 per cent of respondents viewed that their personal risk of unemployment has grown from the previous year.
Consumers are reluctant to make major purchases. Only 12 per cent of respondents estimated that last month was an opportune time to make major purchases, representing a drop from both the previous month and previous year.
Over two-fifths (44%) of respondents indicated that they will reduce spending and only eight per cent that they will increase spending on durable goods in the coming year. Only 10 per cent of respondents revealed that they were considering buying a house and 11 per cent that they were considering buying a car within the next year, both shares marking a drop from the long-term average.
Renovation plans, however, rebounded to their usual level, with 17 per cent of respondents saying they intend to spend on renovations in the next year.
Juho Keskinen, the chief economist at the Mortgage Society of Finland (Hypo), pointed out that concerns about job loss appear to have replaced high inflation as the reason for the doom and gloom of consumers.
“Whereas a while ago the lack of confidence was attributed to high inflation, fears about unemployment have replaced it as the reason for uncertainty. Few were planning on buying a house, and consumers seemed to clearly be waiting for a drop in interest rates and news about the recession ending,” he analysed.
Economist Roope Ohlsbom from the Federation of Finnish Enterprises drew attention to the rapid erosion of confidence among pensioners.
“The discussion about cutting pensions and increasing taxes on medium and high-income pensioners is clearly manifested as eroding confidence among 65–74-year-olds. Confidence also decreased in other age groups, the decrease among 65–74-year-olds was so steep that you could even talk about a collapse,” he said.
More than 1,200 Finns responded to the confidence survey on 1–18 April.
The Confederation of Finnish Industries (EK) on Monday reported that business expectations about the economy have improved slightly but remain unusually pessimistic, with businesses expecting both output and sales to continue falling in the coming quarter.
The economic downturn has hit especially construction and manufacturing, whereas the recent widespread political strikes had an impact especially on manufacturing. Business profitability is unlikely to improve in the near future, according to EK.
The decline in production has also put a damper on hiring, affecting employment in the private sector.
“Employment has decreased already for several months. Given that employment reacts to [changes in] production at a delay, the turnaround in employment will not be seen until next year,” predicted Sami Pakarinen of EK.
Half of the businesses that responded to the survey stated that insufficient demand remains the main obstacle to growth.
“Judging by the responses of businesses, the economic situation will become weaker before it becomes better. There is fuel to resume growth at the end of the year, but a lot is riding on one thing, interest rate cuts,” he said.
Aleksi Teivainen – HT
