Economic growth slowing down, renewal investments cautious
According to the report of the Ministry of Economic Affairs and Employment on the current situation in economic and industrial policy, the growing tensions in trade policy, a global reduction in investments, and the general tendency towards indebtedness in the global economy are prompting companies, including Finnish companies, to postpone their investments and ambitious innovation projects.
Finland’s economic growth rate in 2019 is still reasonably good, but it is not likely to be more than 1.5 per cent. The estimates of various forecasting institutes for this year have been revised downwards since last autumn by half a percentage point on average. Global economic growth will slow down to about three per cent annually as global trade and investment growth declines.
“Uncertainty continues to characterise the global economy. The growing tensions between the superpowers in trade and technology have a negative impact on trade and investments. Economic growth in Finland’s key trading partner countries such as Germany and Sweden is clearly weakening. In these conditions, Finland must focus on its competitiveness in order to maintain good export opportunities,” says Olli Koski, Director, Ministry of Economic Affairs and Employment.
Owing to numerous political and economic risks, chances of both the economy and foreign trade developing less favourably than expected are quite high. In Finland, lack of investment appetite and shortage of skilled labour force and competence are the major obstacles of growth in the long term.
“According to public innovation financing providers, the number of ambitious innovation and renewal projects in progress is still disappointingly small. To improve the situation, cooperation between research institutions and companies must be increased, and financing should focus on radical innovations. To alleviate the talent shortage, activities such as the Talent Boost programme should be continued in order to attract more international professionals,” Koski summarises.
Finnish risk investors invest less than their European peers
This time appendices to the situation report include more detailed reviews of Finland’s economic outlook and early growth stage capital investment markets.
The review of the capital investment markets suggests that corporate financing and the capital investment sector in Finland have shown positive development in recent years. Even though this positive development continued in 2018, there is still a need for smaller and larger funds for early growth stage businesses. Finnish early growth stage (venture capital) investors still invest less than their European peers. The small size of investments is considered to limit the opportunities of Finnish growth companies.
The situation report is based on a survey conducted by the Ministry of Economic Affairs and Employment in eight organisations operating under the Ministry (Business Finland, Energy Authority, Finnvera, Geological Survey of Finland, Finnish Competition and Consumer Authority, Finnish Patent and Registration Office, Finnish Industry Investment Ltd and VTT Technical Research Centre of Finland). The purpose of the survey is to obtain the views of these organisations regarding the dynamics in the operating environment, any relevant changes over the past six months, and an estimate of future development.
Olli Koski, Director, Ministry of Economic Affairs and Employment, tel. +358 29 504 7174
Kai Husso, Chief Planning Officer, Ministry of Economic Affairs and Employment, tel. +358 29 506 3683