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Consumer confidence recovers; businesses more cautious
Consumer confidence swung upwards slightly in July, while industry cautiously recovers.
Statistics Finland’s confidence indicator was -6.4 in July, compared to -8.6 in June and the long-term average of -2.7.
“Even though confidence is still lower than usual, from the perspective of economic growth, the increase is good news,” says Petri Malinen, a senior economist at Suomen Yrittäjät, the Finnish SME association.
By contrast, challenges are posed by the drop in consumers’ confidence in their own economy in a year’s time, which has now fallen below its average level.
“This probably shows that the view of Finland’s economic development continued to be bleak. The drop in Finland’s credit rating was unlikely to have improved that impression. In this situation, many consumers think it’s better to prepare for weaker times,” Malinen says.
Consumers’ expectations about the unemployment numbers continued to be pessimistic.
“In spite of the challenging unemployment figures, consumers are spending slightly more often than before. This is good news, as the rise in economic growth we’re waiting for is based on private consumption,” Malinen says.
Cracks in business confidence
The confidence indicator for industry, published by the Confederation of Finnish Industries, dropped after the start of Donald Trump’s tariff war in April, but now the mood in this export-sensitive sector is cautiously rising.
“In future, we can expect a significant rise in confidence, as the EU and the US made a trade deal and the months of uncertainty would seem – at least for the moment – to be behind us,” Malinen says.
Other sectors’ development was cautious, with confidence falling slightly.
“It looks like consumers’ increased confidence is not yet widely reflected as increased demand for what businesses sell. Private services are the only area where the expected shoots of growth are most clearly seen. On the whole, businesses’ confidence indicates slight economic growth.
“Even though there was no big growth injection in the summer, in terms of economic growth many factors are in a reasonably good position. However, the challenge is that without confidence in the future, businesses will not invest, meaning the trend could continue to be sluggish,” Malinen says.
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