Jan von Gerich, Nordea’s chief analyst, estimates that the forecasts will be revised downwards as the number of coronavirus infections increases.
How to prevent the spread of the coronavirus while keeping the economy in motion?
As early as the spring, it was clear that decision-makers around the world will have to balance this issue for a long time to come. Now it is very timely again in Europe, as the number of communicable disease cases detected in several countries has risen sharply.
Overall, the number of new infections in Europe is rising more sharply than on other continents, From the database on Our World in Data. Admittedly, the number of people tested strongly influences the number of confirmed infectious disease cases.
The second wave of the pandemic has hit Andorra, the Czech Republic, Belgium, the Netherlands and France particularly hard in Europe. These countries have had the highest number of new infections in the past two weeks in proportion to their population.
European The deterioration of the communicable disease situation will inevitably be reflected in the economic outlook for the entire continent, including Finland.
In the summer and early autumn, several indicators of the state of the economy indicated a recovery. Many cyclical forecasts were also revised in a more positive direction. In September, the Bank of Finland and the Business Research Institute Etla published their updated forecasts, both of which were estimated to be smaller than previously expected this year.
One of the biggest uncertainties in Etla’s forecast was the development of the communicable disease situation in Europe.
“We took into account the effects of the new wave of epidemics in our September forecast, but it must be said that the situation has matured somewhat worse than estimated. The increase in infection cases is reflected in particular in the outlook for services and consumption, ”Etlan Forecast Manager Markku Lehmus says.
Nordean chief analyst Jan von Gerich estimates that the deterioration of the communicable disease situation in another European country will not be reflected in the Finnish economy, but now the situation is different.
“Yes, it’s worth worrying about. However, Finland lives largely on exports and Finland is very strongly affected by the general economic situation in Europe. And again, it is affected by the coronavirus situation, ”von Gerich says.
“At least the forecasts for the rest of the year, probably the beginning of next year, will be completely new now.”
Von Gerich estimates that the forecasts will be revised downwards as the number of coronavirus infections increases. He recalls that making predictions is currently much more uncertain than usual.
Several European countries have introduced new restrictive measures. In France, numerous cities have been declared night curfew. In the Netherlands and Belgium, restaurants and cafés must be closed.
The increase in cases of infection affects the Finnish business community, for example, so that it is more difficult for companies to enter into new agreements when it is difficult to meet face-to-face, Etlan Lehmus estimates. Hopes for the arrival of tourists are also becoming increasingly fragile.
In general, the uncertainty of the pandemic situation will inevitably be reflected in Finland.
“As consumer confidence in Europe weakens, so will it. If there is a lot of uncertainty, there is no courage to make new investments and recruitments. Caution is widely reflected in the economy. ”
Lehmus believes that the production chains of goods and, for example, industrial products will remain in better operation than in the spring, despite the weakened communicable disease situation. The threshold for strong containment will be high and now more is known about the virus’s operation than in the spring, he says.
“What matters is what happens next month. Can the situation be leveled off and reversed? ”