A restaurant that closed its doors due to the coronavirus pandemic in Shopping Centre Iso Omena in Espoo, Finland, on 27 April 2020. (Vesa Moilanen – Lehtikuva)


THE CORONAVIRUS PANDEMIC will wreak economic havoc as the measures adopted to fight it change consumer behaviour, eat away at business revenues, increase unemployment and – in the worst-case scenario – kindle a wave of bankruptcies, says Finland Chamber of Commerce.

“If the crisis drags on considerably, the effects may be systemic,” warned Mauri Kotamäki, the chief economist at Finland Chamber of Commerce.

“The national economy’s banking and insurance sector, for example, may be under threat in this case. Decision makers must strive to pursue policies that minimise the economic losses in a way that is safe for public health.”

Over 5,100 employers have started talks about lay-offs and temporary cuts

  • The Ministry of Employment and the Economy has reported that some 20,000 people have been laid off and 164,000 temporarily laid off due to the coronavirus pandemic.
  • More than 5,100 businesses with at least 20 employees have announced talks lay-off and temporary lay-off talks with their staff since 16 March.
  • The talks cover almost 460,000 employees.

Finland Chamber of Commerce unveiled its quarterly economic review this morning, focusing primarily on the economic impacts of the coronavirus pandemic.

Kotamäki warned that if the counter-measures are upheld longer than is necessary, it will not only have unsustainable economic effects but also intensify the second wave of the pandemic that could be triggered by the relaxation of the measures.

Finland, he highlighted, is paying 1.2 billion euros for every week of isolation.

“We do not know exactly what stage of the epidemic we are at currently. The key question will be what the attack rate is now and in the future, if we start gradually lifting the restrictions. It would, however, be possible to start gradually undoing the isolation by utilising a strategy based on extensive testing,” he said.

Kotamäki viewed that one of the most worthwhile investments in the early stage of the crisis would be to develop the health care and testing capacity further, adding that he is disappointed with the lack of progress made by the government on testing.

“The government’s measures have been good in many other respects, although there is still room for improvement in terms of the testing capacity, communication and details of business subsidies,” he told.

Forecasts from various forecasting agencies indicate that the national economy is set to contract by around six per cent in 2020. Scenario-based forecasts that presume that the counter-measures remain in place longer than expected suggest the loss of output would move to double-digit territory.

Kotamäki also said decision makers should prepare and adopt stimulus measures once the limitations affecting the public are relaxed.

Finnish chambers of commerce have already proposed that the government boost purchasing power by slashing income tax rates, expanding the credit for household expenses temporarily and cut the value-added tax on food and beverages sold by restaurants and catering firms.

“As many quickly implementable infrastructure projects as possible should especially be launched because it is presently possible to combine wiping out the investment and maintenance backlog with sound cyclical economic policy. Also unemployment security should be expanded, especially for people living only on basic allowance,” said Kotamäki.

Aleksi Teivainen – HT