Global and Finnish Economic Outlook

Ship orders give substantial boost to order intakes – however, companies still judge the economic situation as weak

Published 12.2.2025

The economic situation of the Finnish technology industry around the turn of the year was rife with contradictory signals. The European export market has remained very weak. At the same time, global uncertainty has mounted significantly, and companies’ outlooks, as measured by various barometers, remain quite pessimistic. However, order intakes in the technology industry saw substantial growth in the fourth quarter. Although the increase in order intakes is largely explained by a handful of very significant individual orders, this could be interpreted as the first tangible sign that the economic cycle is closer to an upswing. However, it is too early to declare that there has already been a turn for the better. According to the evidence, it is all too clear that the economic climate has remained weak.

According to the growth forecast issued by the International Monetary Fund (IMF) in January, total global economic growth in both 2025 and 2026 will amount to 3.3 per cent. Global economic growth is still projected to fall significantly short of the pre-coronavirus crisis 2000s. According to the IMF, the average global growth rate from 2000 to 2019 was 3.7 per cent.

The IMF also predicts that global inflation is clearly trending downward. Global inflation is forecast to be 4.2 per cent in 2025 and 3.5 per cent in 2026. Choosing its words conservatively, the IMF identifies political risks that could hamper the decline in inflation as one of the key threats to global economic growth. The IMF is, of course, referring to U.S. President Donald Trump’s concerning statements about tariffs and starting a global trade war.

Regional and country-specific forecasts have also changed course from the previous trend — the IMF lowered its growth forecast for the U.S.  from its October report and increased the projected figure for the eurozone. That said, the growth rate in the United States is still predicted to be twice as fast as in the eurozone. In its January forecast, the IMF projects that U.S. growth will be 2.7 per cent in 2025 and 2.1 per cent in 2026. The corresponding figures for the eurozone are 1.0 per cent and 1.4 per cent.

European industry continues to face difficulties

The latest Purchasing Managers’ Indices for European industry that were released in January did not bring any relief to the outlook for demand. Such relief is much-needed and has been long-awaited. However, based on the PMIs, European industry is still in a very tight spot. Employment is down, there are fewer new orders, order books are running thin and production is contracting.

The PMI reading for January did improve slightly compared to earlier months, but remained firmly below the 50-point growth threshold. In other words, the PMIs indicate that the challenging situation persisted at the beginning of the year.

With respect to the large industrialised European countries, Germany and France remained in a difficult situation. The PMIs indicate that production continued to shrink in both countries at the beginning of the year. However, as in the eurozone as a whole, the situation in Germany and France was slightly less worse in January than in 2024.

The difficulties faced by European industry are strongly reflected in demand in the Finnish technology industry. In 2024, the EU accounted for about 55 per cent of the technology industry’s exports of goods. It is unlikely that the outlook for the Finnish technology industry will become permanently brighter unless the European situation sees a significant turn for the better on a broad front.

In the United States, PMIs saw sharp movement both before and after the presidential election. Industry was nervous before the election, but the election of Trump seems to have boosted confidence in U.S. industry. At the beginning of 2025, PMIs in industry managed to leap to growth for the first time in about half a year. In the service sector, however, sentiment plummeted in January. It can be concluded that there is significant uncertainty about how the situation will develop. At present, the good momentum in U.S. industry is welcome news, as it seems that strong demand for products made by the Finnish technology industry will continue in the United States during 2025.

The threat of trade war overshadows the outlook – overall uncertainty is riding very high

Donald Trump’s brash start to his second term as president has pushed economic uncertainty to extremes. His aggressive threats and imperialistic speeches about annexing other countries, or parts of them, to the United States to protect national security are not all that different from the narrative Russian President Vladimir Putin uses to justify his own interests.

In any case, the rise in geopolitical uncertainty breeds greater economic uncertainty — and uncertainty always makes business decision-makers cautious.

At the time of writing, there was no information on what kinds of tariffs Trump intends to impose on Europe. In his speeches, he has mentioned ten per cent. It is not yet clear which products the tariffs would target. It is somewhat certain that if the tariffs materialise, they will further sap the weak growth outlooks for Finland and Europe as a whole.

Tariffs are particularly harmful to Finland because our economy is very export-driven.

No changes in the economic outlook of the manufacturing industry in January

The Business Tendency Survey published by the Confederation of Finnish Industries (EK) in January is almost a rerun of the previous survey in October. Based on results for the entire manufacturing industry, companies still assessed their economic situation as very difficult in January. Their views of the situation have been very much in the red for more than two years. The balance figure illustrating the economic outlook has stalled at around zero for almost a year now. In other words, although the industry is slightly optimistic that there will be a turn for the better, these hopes have not been realised yet.

According to EK’s Business Tendency Survey, the technology industry is in a slightly weaker position than the manufacturing industry on average. Insufficient demand is by far the greatest obstacle to growth both in industry as a whole and in the technology industry. Demand has remained weak, with no changes, for over a year.

The TeknoBaro member survey in December had similar news to report. In the view of a clear majority of technology companies, the situation worsened towards the end of the year. On the upside, it was expected that R&D investments will swing to growth in 2025. This could be optimistically interpreted to mean that companies have faith in the future and are prepared to invest in growth in spite of the great prevailing uncertainty.

Survey data does not indicate a turnaround – order intakes tell another story

The surveys assess the sentiments of companies with a variety of indicators and methods, but none of them point to a turnaround in the business cycle. Instead, the surveys present a consistent and clear message. The situation has remained unchanged at the turn of the year — that is, poor.

The latest balance figure for tender requests in the technology industry also bears the same message.  Data collected in January indicates that the balance figure is -7. The fact that the balance figure has remained negative indicates that weak demand persisted at the beginning of the year.

However, the euro-denominated order intake did see substantial growth from the previous quarter. In fact, this past quarter was the first during which the order intake did not reflect the same picture of the economic situation as the surveys. What does this indicate and what is the reason behind the high order intake?

First of all, the high order intake is due to a cruise ship order recognised during the quarter. The exact value of this order has not been disclosed to the public, but a look at the export statistics of Finnish Customs for November 2023, when a ship of a similar size was delivered to the customer, yields some insight into the matter. At that time, the export statistics showed a one-time increase of almost two billion euros in ship exports.

Several other individual high-value orders were also recorded during the quarter, increasing the order intake. Demand may also have been momentarily supported by uncertainty about tariffs: companies are trying to expedite orders and deliveries before tariffs come into force.

However, a few individual high-value orders do not fully explain the good order inflow seen during the quarter. It seems that, after a long sedate period, companies saw a wider uptick in new orders in the fourth quarter.

On the other hand, in terms of personnel development in the technology industry, this was the worst quarter of the current downturn, as assessed by all indicators. The number of employees in the industry continued to fall towards the end of the year, decreasing more than ever before during the current downturn. Likewise, the number of employees on temporary lay-off was at a record high during the quarter. Furthermore, the number of new hires during the quarter hit its lowest figure in the current cycle.

What, then, can we conclude from these contradictory messages? Generally, such conflicting signals are a cautious indication that we are nearing a turning point in the business cycle. The fact that orders bounced back is welcome news. On the other hand, sentiment usually picks up first before order intakes follow suit. This time, the mood at companies is still very downbeat, even as orders increased significantly.

We might conclude that we have now had the first tangible sign that we are getting closer to a turnaround. However, it is too early to state that it has occurred. We can definitively declare that the long downturn is over only when the situation in export markets begins to clearly ease up, the views of the surveyed companies see broad improvement, and order inflows remain on a rising trend. We hope to see more signs of a turn for the better this spring.

Technology Industries in Finland

Order intakes surge – in spite of this, companies report that demand remains weak

According to preliminary estimates, the turnover of technology industry companies in Finland decreased by approximately two per cent in 2024 from 2023. Turnover fell in mechanical engineering and the metals industry. Turnover remained largely unchanged in the electronics and electrotechnical industry and was on the rise in information technology and the consulting sector. Turnover in Finland amounted to around EUR 99 billion in 2024. In 2024, revenue was depressed by both a decrease in production volumes and a decline in producer prices.

The monetary value of new orders in the October-December period was 48 per cent higher than in the previous quarter of the year and 22 per cent higher year-on-year. The surge in order intake is in large part due to a very valuable ship order recognised during this quarter. Order intake was also bolstered by a few other high-value orders. However, the stronger order intake was not due solely to a few individual orders; after a long sedate period, activity perked up on a broader scale in the technology industry during this quarter. At a company level, 56 per cent of companies reported that their order intake had increased compared with the previous quarter.

The balance figure for tender requests in January was -7. Data collected during January indicates that the overall demand situation in the market remains weak. An upswing in the number of calls for tenders has usually been a moderately reliable sign of recovery. For now, we must still wait for a turnaround.

At the end of December, the value of order books was 11 per cent higher than at the end of September and 5 per cent higher than in December 2023. The value of order books of deliverables to Finland continued to decline. This indicates that the stronger order books are largely due to the export orders of larger companies. From this, it can be concluded that the situation in the Finnish subcontracting sector has not improved yet in spite of the strengthening of total order books. Looking at companies on an individual level bears this out — 56 per cent of companies report that their order books weakened from the third to the fourth quarter.

On the basis of order trends at the end of last year, the turnover of technology industry companies is expected to gradually start rising during the present year.

The number of personnel employed by technology industry companies in Finland in 2024 was down 1.1 per cent on average, or 3,700 people, from 2023. On average, the industry employed approximately 331,000 people in 2024. At the end of December 2024, the industry had approximately 328,000 employees. The number of employees decreased throughout 2024. In the fourth quarter, the total number of employees was down 2,500 year-on-year. At the end of the year, the number of personnel fell more sharply than ever before during the current downturn.

According to the personnel survey by Technology Industries of Finland, the number of employees affected by temporary lay-off procedures at the end of December was approximately 23,000. This figure rose slightly in the fourth quarter — the number of people temporarily laid off was at its highest level since the coronavirus crisis.

Compared to earlier years, recruitment of new employees remained at a low level in the October-December period. In total, recruitments came to only 5,500. Some companies were increasing their payroll, while others were hiring new employees due to retirements and employee turnover. The number of hires was also at its lowest ebb since the coronavirus crisis.

Economic Outlook on technology industry’s sub-sectors

ECONOMIC OUTLOOK 1 | 2025

Information based on the situation on 12 February 2025
Petteri Rautaporras, Director, Chief Economist, tel. +358 50 304 2220
Hanne Mikkonen, Economist, tel. +358 44 0296 152

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Next Economic Outlook will be published 7th May 2025 at 10.00 am.