Prospects for industry, construction and business services in autumn 2014
The Finnish national economy is recovering from the fairly sharp dip in total output at the end of last year. The revival in output has been accelerated by, among other things, the growth in orders received by industry almost continuously since last February, as well as the weakening of the euro against the dollar during autumn 2014. Counterbalancing this, Russia’s economic difficulties and the sharp weakening of the rouble have cut into our exports and total output.
Industrial output will contract by approximately half a percent this year compared with last year. Assessment of the development of Finnish industrial output is complicated by the conflicting signals given by different Statistics Finland datasets. Services supporting industry — information services and professional, technical, and scientific activities — are once again in clear growth. The shift in the production focus towards services continues.
The greatest risks to the development of the Finnish economy and its industry are connected to the international economy and, within that, to the resolution of the Ukraine crisis. A new escalation of the situation would not only cut further into our already shrinking eastern exports but would also generate the kind of uncertainty that would weaken investment throughout Europe. Correspondingly, a movement of the Ukraine crisis from its current frozen state towards a better outcome would have a positive effect on the Finnish economy as well. The future decisions of the European Central Bank will also influence Finland’s economic development going forward. If eurozone inflation does not accelerate clearly from its current level of 0.4 percent and if the ECB does not respond to this by increasing quantitative easing, there is a risk that the restraint characteristic of deflationary expectations will be reflected in eurozone investment and consumption decisions. This would slow growth in the region and would naturally also have a detrimental effect on Finland’s exports. (AI translation)
