Satama-alue, taustalla auringonvalo.

Technology Industries of Finland: Demand continues to weaken, but moderately

Although demand has continued to wane during early 2023, technology industry order intake is holding up for now. However, the outlook is sluggish: turnover growth will slow down or stall altogether in early 2023, even though the higher level of prices continues to contribute to turnover development.

This information is based on the recent order book and personnel survey published by Technology Industries of Finland.

“Sentiments have brightened slightly from the end of 2022 since the worst energy crisis fears have been allayed. It looks like we will not see a severe recession, at least not in early 2023, but near-zero growth or a slight contraction is to be expected. It is worth noting that output volumes did not grow in the second half of 2022 in the manufacturing sectors of technology industry” says Petteri Rautaporras, Director, Chief Economist at Technology Industries of Finland.

Technology industry companies reported that the monetary value of new orders in the October-December period was 12 per cent higher than in the previous quarter, but 6 per cent lower year-on-year. In mechanical engineering, which is the largest technology industry sector, the value of new orders in the October-December period remained unchanged from the previous quarter. Year-on-year, the value of new orders decreased by 16 per cent despite the rapid increase of producer prices.

The balance figure for tender requests in January was -12, indicating a continued decline in demand. However, the rate of decline remains moderate.

“While they have eased, risks to the economy remain high. It would be better not to rock the boat. Eurozone manufacturing output is expected to contract further in early 2023,” Rautaporras points out.

The number of personnel employed by technology industry companies in Finland increased by 13,000 people in 2022 from 2021. At the end of December, the industry employed approximately 338,000 people.

No head-in-the-sand attitude

As the political parties are gearing up for an election, Jaakko Hirvola, the CEO of Technology Industries of Finland, would like to see the concerns of experts taken seriously. Decisions need to be made to tackle areas such as indebtedness, employment, skills shortage, quality of education, stepping up investments and green transition, and availability of energy and raw materials.

“It is time to face the facts. Finns will understand what is necessary and best for the future. Cuts need to be introduced to maintain our welfare state, some of which may be painful on the short term. Nevertheless, they are necessary because we cannot continue to finance benefits with debt that is becoming more expensive all the time,” Hirvola emphasises.

According to Hirvola, skills shortage is another momentous issue for economic growth and survival of the welfare state. Significant levels of immigration are required, and this is clearly evident from the statistics on ageing and birth rates in Finland.

“The time for that discussion is over. Instead, the focus should be on how to best attract immigrants to the country and quickly integrate them into the Finnish society,” Hirvola concludes.

Economic Outlook 1/2023

Further information:  

Jaakko Hirvola, CEO, phone +358 40 063 3751

Petteri Rautaporras, Director, Chief Economist, phone +358 50 304 2220