Uncertainty on, though business conditions near pre-pandemic levels

Economic expectations among SMEs have risen sharply following the pandemic year, showed the SME Barometer of 4,600 entrepreneurs.

About 35% of small and medium-sized companies in Finland see an upward economic trend over the next 12 months, compared with 26% of companies six months ago, said Ministry of Economic Affairs and Employment, quoting the SME Barometer published on Wednesday.

At the moment, 13% of respondents believe that economic conditions will deteriorate, down from 23% six months earlier.

“SMEs have trust in the recovery of the Finnish economy now, similarly to consumers. These are positive and important signals about the state of the economy. At the same time, economic conditions are also improving in Finland’s trading partners. I encourage companies to seize the market opportunities that the growth phase offers as the pandemic subsides,” said Minister of Economic Affairs Mika Lintilä at the publication programme.

“The economy is recovering rapidly now. However, the expectations of SMEs still involve a considerable amount of uncertainty as to the future course of the pandemic and the restrictions it has caused,” said Mika Kuismanen, Chief Economist at the Federation of Finnish Enterprises.

The near-term expectations of larger SMEs, in particular, are more positive than those of micro-sized companies. Nine out of ten companies operating in Finland are micro-sized companies employing fewer than 10 people.

The SME Barometer was conducted as an online and telephone survey by Taloustutkimus Oy in June and July 2021. In all, 4,592 representatives of Finnish SMEs responded to the survey, which was commissioned by the Ministry of Economic Affairs and Employment, the Federation of Finnish Enterprises and Finnvera.

Entrepreneurs are concerned about rising production costs. The prices of raw materials and other intermediate products, in particular, are expected to increase more than before.

“Although companies can increase the margins for their products and services, it will not be enough to compensate for the higher price of intermediate products,” said Petri Malinen, Economist at the Federation of Finnish Enterprises.

“This is a challenge, because production costs are expected to rise sharply while the exceptionally uncertain situation continues and companies have weaker economic buffers at their disposal. That is why, negotiations on pay rises this autumn should not be solely based on expectations of economic growth,” Malinen added.