The outlook for Finnish industry remains weak, and it is unlikely the coming months will deliver any improvement. In fact, the Confederation of Finnish Industry and Employers' (TT) latest business tendency survey notes that the economy might still slow down if only slightly before the bottom is reached. A clear rebound in economic activity is not to be expected in the next six months: for that we will have to wait at least until next summer.

During the current year, the growth in labour productivity has also come to a halt. There has been no improvement in industry productivity on average. This means that under current wage contracts, salaries will grow faster than is provided for on the basis of improved productivity.

The profitability of companies has also deteriorated, partly due to insufficient demand, but also due to lower and lowering prices. The fall in profitability, the halt in productivity growth and the prolonged recession ­ all these might have a greater effect on employment than anticipated. Though the fi
nancial solidity of companies is better than in past years, an enduring recession will also be a threat to their financial positions.

Under these circumstances, the basic thrust of fiscal policy is in the right direction. This and next year's budgets are expansionary enough. No new decisions are needed unless the outlook for next year clearly deteriorates. However, the government should be prepared if a fall in employment were to materialise.

The success of Finland's export sector has been an important source of well-being to citizens. Yet, difficulties in exports spill over quickly and with a powerful effect to the rest of the economy.

Despite the weakened economic outlook Finland was recently ranked first on the Global Competitiveness Report 2001 launched by The World Economic Forum (WEF). Once the upswing of the economy starts again Finnish companies will be in a strong market position.

>> www.tt.fi