Business Environment

Business Environment

The number of coronavirus infections rose again in early 2021, which is slowing down economic recovery. It is expected that economic growth will be accelerated by private consumption towards the end of the year. The economy is forecast to grow by 2.6% in 2021, with recovery set to continue in 2022. An increase in vaccination coverage will support economic confidence. (Source: Bank of Finland)

The coronavirus crisis has had a smaller-than-expected impact on production in the construction sector, which only contracted by one per cent in 2020. Urbanisation is continuing in Finland and the population shift is maintaining demand for both housing and commercial construction, especially in growth centres. New construction is forecast to contract by two per cent during the year, and will focus on growth centres. (Source: Confederation of Finnish Construction Industries RT)

Housing construction has slowed down less than was predicted in earlier forecasts. The construction of an estimated 37,000 residential units will begin during 2021 and housing production will remain at a historically good level. Next year, the number of start-ups is expected to fall to 34,000 residential units. Low interest rates are supporting demand among both investors and consumers, and regional disparities are continuing to form. Although commercial construction will slow during 2021, public construction will remain at a good level. Slight growth is expected in the construction of all kinds of commercial premises next year. (Source: Confederation of Finnish Construction Industries RT)

As a result of the impacts of the coronavirus pandemic, investors have primarily been interested in housing, logistics and civic properties, while investments in hotels and shopping centres have slowed down. There is a great deal of capital seeking good investments in real estate property. Foreign investors are expected to become active again once vaccination coverage increases and travel restrictions ease. (Source: KTI/Newsec)

Forecasts for the Russian economy have improved since last autumn. These positive developments have been influenced by the trend in the price of oil and the impacts of the coronavirus pandemic being less than expected. GDP is expected to recover rapidly from the downswing in 2020, with growth of almost three per cent forecast for 2021. Private consumption will continue to recover this year and over the next few years. (Source: Bofit)

Interim Report 1-3/2021, 29 April 2021