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Finnish economy emerged from corona spring as EU winner, most economists say worst is over

Most economists surveyed by Yle say that the worst is over as far as the economic impact of the pandemic.

Kuvassa on Helsingin Senaatintorin jättiterassi heinäkuussa 2020.
Outdoor diners on Helsinki's Senate Square: Experts say Finland has coped with the pandemic better than most countries. Image: Silja Viitala / Yle

Last spring, many think tanks and banks predicted that Finland's economy might shrink by as much as 10 percent this year due to the coronavirus crisis.

However, according to preliminary figures out this week from Statistics Finland, seasonally adjusted GDP fell by just 3.2 percent in the second quarter compared to the previous quarter. Adjusted for working days, GDP was 4.9 percent lower than in the corresponding months of 2019.

Finnish economy relatively unscathed

Based on Eurostat figures, Finland's economy fared the best of any in the EU last spring.

On average, EU countries’ GDP plunged by 11.7 percent between the first and second quarters of this year – or more than three times worse than here.

Neighbouring Sweden, which took a more relaxed approach to the pandemic and suffered much higher infection and death rates, saw its economy fall by 8.6 percent in the same period. Another Nordic EU neighbour, Denmark, experienced a 7.4 percent drop.

Yle surveyed 22 leading Finnish economists on the outlook for the country’s economy. Twelve of them said that they do not believe the economy will slow further this year, or may even improve.

Seven said that the situation is so murky that no predictions can be made for the autumn, while three said they expect matters to deteriorate further.

Smooth transition to remote work

All agreed that the autumn outlook is exceptionally uncertain, and depends heavily on whether Finland's export markets rebound. Early this year, before the pandemic spread, many had full order books but have since seen demand slump.

“There are many sectors where the outlook can’t be gauged until autumn. When the vacation season in [continental] Europe ends, we’ll begin to see signs of international corporations’ ability and willingness to invest after the crisis,” says Nordea Bank’s chief economist, Tuuli Koivu.

Nearly all of those surveyed said that Finland’s economy has made it through the pandemic relatively unscathed compared to other EU countries because it did better at controlling the spread of the illness.

The economists agree that the government and other officials generally made the right decisions at the right time, and that much of the labour force transitioned smoothly to working remotely, thanks to solid digital skills and infrastructure.

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