“It looks like the investment has hung there, but I doubt it more than a fleeting moment,” he expressed in his blog.
Construction is of great importance, as it accounts for more than 60 percent of investments in Finland. Although construction investment rose by two per cent seasonally adjusted in the second quarter, it does not necessarily accurately reflect the current trend, Pakarinen warned.
“Construction investment increased as new projects were started due to previously acquired permits. Permit development should be monitored according to investment development, ”he said.
Pakarinen pointed out that the annual permit issued for new construction projects in May 2020 was 10 percent lower than in May 2019. The number of permits issued for construction projects from April to June was more than 30 percent lower than for similar construction projects last year. The total annual number of building permits for housing was about 15 percent lower than a year earlier in June.
“It looks like construction will have a big negative impact on the national economy unless permit development soon sends in a better direction,” he predicted.
He pointed to the lack of a clear urban policy to support the growth of population centers as one of the influencing factors, as the recent pandemic-based riser is unlikely to have a major impact on migration trends.
“A functioning housing market also guarantees the movement of people between urban areas, which supports labor mobility and employment,” Pakarinen said.
In contrast, investment in equipment and machinery has been declining for some time and there are no signs of recovery on the horizon.
“Finland’s long-term competitiveness factors play a key role in equipment and machinery investments,” Pakarinen said. “Correcting public finances with tax increases is a real threat when considering long-term investments. Labor supply is also key, but we can make a difference by increasing employment migration. “
“The picture isn’t beautiful either in the slightly longer term,” he added. – We urgently need a long-term policy that is in Finland’s long-term interest. This would increase confidence in Finland as an investment environment. “
Pakarinen pointed out that the economic policy debate usually tends to circumvent employment and public debt, the first of which is mostly a tool for correcting difficult public finances.
“Investments, on the other hand, are a means to create sustainable growth and support an important driver of economic growth, which is productivity. In terms of public debt, foreign capital should be used primarily to support investment and increase human capital rather than increase fixed expenditure,” he argued.
Aleksi Teivainen – HT
Quelle: Neues Finnland
Quelle: Die nordische Seite