Economy & Politics

Corona crisisUnobserved successful: Finland in the pandemic

A statue in Helsinki was alienated for the fight against Coronaimago images / Newspix24

During the pandemic, Finland managed what many countries are struggling for: The Nordic country has kept the number of infections comparatively low – and at the same time only recorded a minor economic slump.

There have only been around 29,000 corona cases in Finland so far – in Germany that was the last number of new infections every day. Now the Finnish population of just 5.5 million people is significantly smaller than the German. But Finland is also one of the front runners when it comes to the infection rate per 100,000 inhabitants: According to the European Center for Disease Prevention and Control (ECDC), Finland has the lowest infection rate of all EU countries after Ireland, with 108.8 infections per 100,000 inhabitants . The death rate related to Covid-19 is lower in Finland than in any other EU country.

But Finland is not only successful in containing the pandemic: the Scandinavian country’s economy has also been comparatively stable so far. In the second quarter – during the first wave of the corona pandemic in Europe – Finland recorded the lowest economic slump of all EU countries. The gross domestic product (GDP) fell by only 4.4 percent, while the average for all EU countries fell by a full 11.6 percent. In Germany it was 9.8 percent.

Previously lockdown as a recipe for success

In many places there is debate about what should have priority in the Corona crisis: curbing infections or keeping the economy going. The example of Finland seems to show that there doesn’t have to be an “either / or” in the pandemic – no “economy or health”. There are several reasons for the Finnish success: On the one hand, the strategy of the Finnish government around Prime Minister Sanna Marin seems to be working. In the spring, when there were still comparatively few infections in Finland, the government reacted quickly. The region around the capital Helsinki, a heavily populated area, went into a two-month lockdown. Travel to and from the region was banned, schools were closed, and at times restaurants too.

Markku Lehmus, head of the forecast department at the independent Finnish economic research institute ETLA, considers this early lockdown to be a decisive factor in the Finnish crisis management. “We have learned from this crisis that it is more effective if you impose this type of lockdown early and that it doesn’t have to be that tough,” he says. In Finland restaurants and schools were temporarily closed, but there were no exit restrictions. The strategy helped bring the pandemic under control. “And the lockdown wasn’t too expensive for the Finnish economy,” says the economist.

Finland’s Prime Minister Sanna Marin (Photo: imago images / Lehtikuva)

In addition, the Finnish government can be sure of broad popular approval for its corona policy. According to data from the EU Parliament, 67 percent of Finns are generally supportive of their government. This is the highest value in the EU after Luxembourg. Even higher, at 71 percent, is the proportion of Finns who are satisfied with the measures their government has taken.

The geographical conditions are also likely to be an important reason why the Finns have so far controlled the pandemic comparatively well: Finland has the lowest population density in the entire EU: there are only around 18 inhabitants per square kilometer – in Germany there are around 235. More than a tenth of the Finnish population lives in the capital Helsinki.

Finnish culture also seems to be good for dealing with the crisis: “Social distancing” is natural for many Finns, says Lehmus. A stereotype that plays a role in many jokes about Finns. “But in fact it is easier for us to keep our distance and adhere to these rules.”

Economic structure less vulnerable

The comparatively low number of infections, which required less severe restrictions after the early lockdown, should also have helped the Finnish economy. But there are other reasons why Finnish GDP suffered comparatively little from the pandemic. Lehmus sees one of these reasons in the structure of the Finnish economy: “The Finnish economy is not so dependent on the service sector and especially not on the areas of the service sector that require social contacts,” says the economist. “Our economy is more dependent on industry.”

According to the World Bank, industry in Finland accounts for 38 percent of GDP, the service sector 60.3 percent and agriculture around two percent. The structure is thus similar to the German one. On the other hand, there are major differences in comparison with France and the USA, which each generate more than 70 percent of their GDP from the service sector.

The recovery of the Finnish economy in the third quarter was also less than in other EU countries due to the smaller slump, says Lehmus: “It seems that many services were able to recover in the third quarter, but not all. The hotel and catering sector is still suffering ”. The industry, however, was able to recover quickly, and the information and communication sector even grew somewhat in the third quarter.

But the recovery in the industry does not affect all areas: The wood and paper industry is doing badly, says Lehmus. Overall, he assumes that the fourth quarter will also be difficult for Finland in view of the increasing number of infections. He assumes a slight decline or stagnation in GDP – but he does not expect a major slump.

Labor market comparatively stable

Financially, the corona crisis in Finland seems to have hit significantly fewer people so far than in other EU countries. In a survey by the EU Parliament, only 21 percent of the Finns surveyed state that the Corona crisis has affected their personal income. Across the EU, on the other hand, almost twice as many people said this (39 percent). 41 percent of Finns even assume that Corona will not have any influence on their income in the future either. “The labor market wasn’t too badly affected,” says Lehmus. “Unemployment has increased, but only up to a certain point.”

The social security and welfare systems have also helped. “It encourages people to think that they can get through these difficult times.” The Finnish government gave support to companies in need: “The state subsidies were probably the most important factor here,” says Lehmus. In addition, there have been tax breaks and increased public investments, especially in the health sector.

Digitization as an advantage in a crisis

Another factor that benefited Finland in the Corona crisis: The country is considered a pioneer in the EU when it comes to digitization. Finland recently took first place in the EU’s Digital Economy and Society Index (DESI) and was well above the EU average in all five areas examined – human capital, use of internet services, integration of digital technology and digital public services. It should have been comparatively easy for Finland to shift many activities to digital.

Digital technology is also playing a major role in Finland in overcoming the crisis. Almost half of the population has the Finnish Corona app installed. The app’s acceptance is significantly higher than, for example, its counterpart in Germany.

Part of the truth is that the number of infections is rising again in Finland too. And also in Finland, certain measures to contain the pandemic still apply. Meetings are limited – with different upper limits depending on the region – and restaurants have limited opening times. In addition, tourists are currently not allowed to travel to Finland. “I’m worried, but at the same time I think we can cope with it because we did it in spring,” says Lehmus.

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