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Finland’s exports and industrial orders in recovery

The Finnish economy seems to have been spared the deep export industry crisis feared last autumn.

Rekkojen perävaunuja Hangon satamassa.
Finland's exports to China in particular are showing strong growth. Image: Petteri Bülow / Yle

Finnish export industries have been generating some good news in recent weeks and months.

New orders in manufacturing grew by 18.9 percent year-on-year in February, according to Statistics Finland. Orders grew in all industrial sub-sectors, but the sharpest rise was registered in the manufacture of paper and paperboard products, where growth was 22.4 percent.

Seasonally adjusted industrial production, on the other hand, grew by 3.4 percent in February compared with January. Growth was seen in all main industries, the largest of which was mining and quarrying (4.8 percent) and the electrical and electronics industry (4.2 percent).

In the last quarter of 2020, exports fell by 7 percent compared to the previous quarter and in January of this year demand for documentation for exports to third countries was 18 percent lower than a year earlier.

The latest Central Chamber of Commerce figures indicate a significant turnaround with demand for certificates of origin for exports to third countries increasing by 11 percent year-on-year in March.

"Many export companies say that there were fears of [the situation] getting worse, but it has been possible to keep the wheels turning surprisingly well and new deals have been made. Vaccinations have been launched, and the Chinese and US markets are beginning to move towards normal," Timo Vuori, Director of International Affairs at the Central Chamber of Commerce, told the Finnish News Agency STT.

Eastward flow

Exports to China in particular are showing strong growth. Filings for certificates of origin by exporters were up by as much as 70 percent over February's level.

According to Vuori, exports to China are on the rise for two reasons. On the one hand, China has reined in the coronavirus epidemic and its market situation has normalised, allowing production and the economy to start, so there is demand. On the other hand, he speculates that due to the coronavirus situation there are products now being exported to China that would normally have been exported to other markets.

Vuori sees one of the biggest challenges for exports in general right now to be in logistics since, for example, it is difficult to access shipping containers. However, he believes supply and demand will reach a better balance as autumn approaches.

Spared a deep crisis

Commenting on new industrial order figures from Statistics Finland, Danske Bank economist Jukka Appelqvist stated that they should create confidence that the business cycle in Finland will continue to improve as the global economy revives.

"In many other countries, the rise in industrial sectors has continued throughout the winter, and there has been a fear that Finland would be left waiting on the platform after the recovery train had already pulled out," Appelqvist wrote in a blog post.

According to Appelqvist, it looks as though Finland has avoided the deep crisis in the export industry which was feared in the early autumn. However, there are problems in other industries. He points out that right now there is a wide gap between service industries and industrial sectors that are well on the way to recovery.

Mining production has also not yet reached last year's level. Furthermore, according to Statistics Finland's preliminary data, the slowest growth between January and February was in the forest industry, which grew by only 0.4 per cent.

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