Less than half of the respondents to the Economist agree that the interest rate crisis has been going on for so long that it will inevitably have longer-term effects on production potential.
Finns Economists disagree on whether the 2020 coronavirus crisis will have longer-term effects on the Finnish economy. It turns out From the economist’s machine survey.
Less than half of the respondents to the Economist (47%) agree that the interest rate crisis has been going on for so long that it will inevitably have longer-term effects on lowering production potential. About a quarter of respondents (24%) disagree with the statement and less than a third are uncertain (29%).
For example Professor Emeritus of Economics at the University of Helsinki Tapio Palokagas believes that there will inevitably be longer-term effects on the economy.
“Human capital is destroyed if people become unemployed and companies go bankrupt,” he explains in his response.
The research director of the Wage Earners Research Institute follows the same lines Tuomas Kosonen.
“It is clear that the coronary pandemic will still hit the economy far next year. Thus, there is no visible rapid rise in the economy to pre-pandemic levels, as many still hoped in the spring. However, the question is how long this will continue, and it is possible that eventually production potential will return to its previous growth trajectory, albeit [se on] uncertain. “
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Aalto University Professor of Microeconomics Marko Terviö in turn, disagrees with the claim of long-term consequences for the productive potential of the economy. The reason is that the consequences are not yet clear.
“Compared to the horror scenarios of last spring, the production chains seem pretty resilient. It may be that the greater pressures for change come from the restructuring of demand, but that remains to be seen, ”he explains.
Professor of Macroeconomics at the University of Helsinki and Helsinki GSE Niku Määttänen is uncertain about the long-term effects of the crisis.
“At the beginning of the crisis, there was a fear of a big wave of bankruptcies. It has so far been avoided thanks to well-functioning financial markets and various government support measures. That is why I think that the production potential in the next few years has not decreased very significantly, ”Määttänen explains.
“However, probably some investments that increase production potential have not been made due to the crisis. On the other hand, teleworking-related ‘digital leaps’ may have been introduced in various quarters, which may increase future production potential. ”
The wave of bankruptcy so far feared has been thwarted by an amendment to the law that came into force last spring, which restricted the right of creditors to file a debtor for bankruptcy. The effects of the change in the law are easy to see: by November, only more than 2,000 bankruptcies had been filed, about 17 percent less than in 2019.
The temporary bankruptcy protection imposed due to the interest rate crisis will expire at the end of January.
Read more: The wave of bankruptcy expected since spring is expected to strike with certainty when bankruptcy protection soon expires
Ekonomistikone.fi website to find out the positions of economists on current economic issues. It is based on the Finnish Economist Panel, which is an independent academic expert panel.