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Economic Outlook 4/2025

The trade agreement reached between the US and the EU at the end of the summer did not result in much-needed predictability and stability in trade policy, and no rapid recovery in demand has been seen yet. Massive uncertainty continues to prevail. However, the economic situation has continued to recover gradually and economic indicators broadly point to an improving trend.

Published 5.11.2025

Global and Finnish Economic Outlook

Hopes of a rapid recovery fade – however, the trend is improving

In its latest forecast published in October, the International Monetary Fund (IMF) revised up its outlook for global economic growth in 2025 for the second time. Even a slight improvement in the forecast indicates that the global economy has, on the whole, fared better than feared in the face of trade and geopolitical uncertainty. However, the IMF emphasises that continued uncertainty still casts a shadow over the growth outlook.

The forecast for the United States for this year and the next was increased by 0.1 percentage points compared with the previous forecast. The 2025 growth forecast for the eurozone was up 0.2 percentage points. The IMF kept its growth forecast for China unchanged from July.

The IMF predicts a global decline in inflation. The US continues to face inflationary pressures due to tariffs, and there is a risk that inflation will pick up speed again.

European economy finally showing signs of improvement

The Purchasing Managers’ Index (PMI) for all sectors in the eurozone rose to its highest value in almost a year and a half. Growth in the eurozone thus seems to have gained strength and the outlook has improved towards the year-end. This is a long-awaited and very necessary development. About two-thirds of the Finnish technology industry’s exports go to Europe. A more pronounced upturn in European demand improves the outlook for the Finnish technology industry.

This is also good news for the manufacturing industry in the eurozone, which has been struggling for a very long time. The eurozone PMI passed the 50-point growth threshold in August for the first time in about three years. Growth remains very shaky, but it seems that the trend has finally turned around for the better. Optimism is fuelled by the fact that the situation has gradually improved this year in spite of all the uncertainty.

The service sector in the eurozone also appears to be more buoyant than it has been for a long time. It could be cautiously concluded that the poor confidence that has long plagued consumers is gradually easing.

In the US, the manufacturing PMI has remained volatile in the second half of the year. This suggests that it remains difficult to say what impact tariffs will ultimately have on the operating conditions of US production. The tariffs will without a doubt improve the situation for American companies producing for the US market. On the other hand, American industrial export companies that purchase intermediate products from other countries are in a much more complicated situation. Tariffs significantly increase the price of intermediate products and thereby substantially reduce the competitiveness of production.

On the whole, the PMIs point to a positive outlook in the months leading up to the turn of the year.

US-EU trade agreement has flopped – trade uncertainty continues

After the tariff agreement was concluded, expectations of a more rapid recovery soared for a while. It was hoped that the brighter outlook would finally kickstart investment projects that had been kept on hold, thereby sparking off a broad upturn in demand across Europe.

However, this did not happen. Quite soon after the tariff agreement was reached, it became apparent that the US “Section 232” steel and aluminium tariffs raise the effective tariffs on many products significantly above the agreed general level of 15 per cent.

These tariffs are imposed on products specified by the US according to their steel and aluminium content. These tariffs amount to 50 per cent.

Even just calculating and determining the payable tariffs is very laborious for companies. In addition, businesses are burdened by the constant uncertainty about which products are listed as being subject to additional tariffs at any given time.

However, the greatest problem facing industry is that companies still lack the longed-for visibility and predictability concerning trade policy development.

Outlook for the manufacturing industry in Finland takes a clear step for the better

The Business Tendency Survey published by the Confederation of Finnish Industries (EK) in October indicates that the situation and outlook for manufacturing improved quite substantially. Manufacturing companies’ assessments of both the current situation and their outlook improved. This improvement in sentiments is the first clear sign of a turn for the better seen in over a year.

In spite of this uptick, companies’ assessments of the factors hindering growth remained unchanged. Insufficient demand was identified as still by far the greatest obstacle to growth.

That said, the upturn in sentiment among manufacturing companies is a promising indication that there will finally be a turnaround for the better.

Uncertainty persists – hopes for a faster recovery have faded

The tariff agreement concluded in early autumn raised hopes of a more rapid recovery in demand. However, uncertainty persists and the hoped-for startup of investment projects on a broader scale has not been seen yet.

In spite of this, economic indicators broadly suggest that there will finally be a turnaround for the better. It is currently thought that this turnaround will not be particularly strong. Instead, demand will pick up gradually and sedately.

Corporate messages indicate that the volume of tenders remains high. This means that companies have plenty of different projects on their desks, but startup decisions are not being made.

Therefore, it would still be possible to achieve faster growth if the uncertainty about trade and geopolitics eases off significantly over the winter. However, it seems increasingly likely that it would not pay off to make plans with the assumption that uncertainty will decrease. The starting point should be that uncertainty is here to stay.

Technology Industries in Finland

Order intake in the technology industry holds up in spite of uncertainty

In 2024, the turnover of technology industry companies in Finland rose by approximately 1 per cent on 2023. Turnover fell in mechanical engineering and the metals industry. Turnover grew in the electronics and electrotechnical industry, information technology and consulting engineering. In 2024, their turnover in Finland amounted to slightly more than EUR 100 billion. In 2024, turnover was depressed by both a decrease in production volumes and a decline in producer prices.

In January–July 2025, turnover in the Finnish technology industry was two per cent higher than twelve months earlier.

The monetary value of new orders in the July–September period was seven per cent lower than in the previous quarter, but ten per cent higher year-on-year. Euro-denominated order intake was reasonable, considering the prevailing market uncertainty. However, it is clear that rapid growth has not started during the autumn and is not expected to materialise in the near future.

The balance figure for tender requests in October was +2, virtually on a par with the figure for the summer. The positive balance figure indicates that there is market activity in spite of the uncertainty. This supports the view that the gradual recovery will continue.

At the end of September, the value of order books was two per cent higher than at the end of June and 19 per cent higher than in September 2024.

Based on order intake in the first half of the year, the turnover of technology companies is expected to increase this year.

The number of personnel employed by technology industry companies in Finland at the end of October was on a par with the end of June. At the end of October, the industry employed approximately 330,700 people. According to the personnel survey by Technology Industries of Finland, the number of employees affected by temporary lay-off procedures at the end of October was approximately 7,700.

Recruitment of new employees was at a low level in the July-September period. In total, recruitments came to approximately 6,700. Some companies were increasing their payroll, while others were hiring new employees due to retirements and employee turnover.

Information based on the situation on 5 November 2025.
Next Economic Outlook will be published 4th February 2026 at 10.00 am.

Contacts:

Economy and Sustainable Growth Management

Rautaporras Petteri

Executive Director, Chief Economist – Economy and Sustainable Growth Technology Industries of Finland

+358 503042220 petteri.rautaporras@teknologiateollisuus.fi

Economy and Sustainable Growth

Mikkonen Hanne

Senior Economist – Economic Development and Investment Technology Industries of Finland

+358 440296152 hanne.mikkonen@teknologiateollisuus.fi