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Consumers more upbeat about economy, guarded about personal finances

Finland’s consumer confidence index shows optimism in December at its highest level since February 2011. However one economist has warned that uncertainty still lurks behind the latest numbers.

Kauppakeskus Iso Omena.
Kauppakeskus Iso Omena, Espoo Image: Henrietta Hassinen / Yle

Latest data from Statistics Finland show that Finnish residents are becoming more upbeat about the national economy. The index reached 19.5 in December, compared to the long-term average of 11.7.

The state agency said that its records show that the last time consumer confidence in the economy was this high was back in February 2011.

In December 45 percent of respondents said they believed that the Finnish economy would improve during the next 12 months. The outlook has improved considerably since one year earlier, when just 24 percent of people interviewed were positive about economic development.

By contrast, confidence in personal finances rose more moderately. In December 27 percent of consumers said they held a positive view of their personal finances, compared to 23 percent one year ago.

Hypo economist warns against overconfidence

Commenting on the numbers, specialised mortgage financing organisation Hypo cautioned against over-optimism with regard to the economic outlook.

Hypo head economist Juhana Brotherus pointed out that consumers' confidence in their finances has lagged behind their faith in the wider economy.

"The Finnish economy is expected to pick up, even though personal finances are still faltering. Unemployment is expected to fall although people don’t feel secure in their own jobs. The structural difference means that the confidence figures rely to some extent on positive economic news and the general mood," Brotherus noted.

The economist warned that even the slightest hiccup in the current fragile economic growth could send consumer confidence into a tailspin. He pointed out that growth is still tepid and that unemployment has not improved as expected.

However he conceded that rising consumer optimism is not entirely unwarranted.

"As a whole the economic outlook brightened slightly, but the rate of growth remains modest and risks are visible beneath the surface."

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