Many uncertainties in the global economy


– Finland well equipped to handle future turbulence

The managing director of a pension insurance company must often act as one of the nation’s official oracles. Varma’s Managing Director Risto Murto ended up predicting the future also when visiting Comatec at the end of January.

Viewed from a pension insurance company’s perspective, the most significant signals at the beginning of 2019 were already familiar from the headlines at home and abroad. The economic boom is behind us, and especially Germany and the Euro region are experiencing less growth. The trade war and Brexit are bringing their own uncertainties into the economy. However, there is no talk of recession, and interest doesn’t appear to be on the rise.

China is a question mark for everybody, and the U.S. is awakening to change

According to Murto, the situation in the Chinese economy will have a global impact, although no one knows exactly what kind of impact. China has had a current account surplus compared to other countries. However, in recent years, this surplus has melted away. Nevertheless, China has not incurred net debt, and the investment rate is still high. The direction is downwards, but not as steeply as normally in this development phase. Some sectors have a lot of debt, and the gross debt of the national economy is high.

”All this is known, but it’s very difficult to say when China’s eventual bubble will burst.”

”This has always led to some kind of hangover in the past. People keep investing and taking internal loans. It is clear that the growth will stop at some point. The structures have been finished. But will it take five or ten years? According to Murto, this is impossible to predict.”

The atmosphere is still quite different in the United States. The industry is in decline, but thanks to massive tax breaks, the economy and especially consumers are still going strong. The trade balance deficit is large, however, and the United States is in a politically unclear situation.

“Trump has been tweeting as a president for two years, but that has had very little real impact. The next years are unclear, however, and the aftermath of Trump’s departure could affect the situation for a long time. It takes time for a country of America’s size to deal with this kind of turbulence.”

Even though there are trends that should give rise to caution throughout the world, Murto doesn’t see Finland’s situation as being so bad.

“Finland’s industrial task force is well-managed and going strong. There will be changes, but Finns are winners for sure. There is no reason to be pessimistic. The structural profitability of industries is on an entire new level compared to previous years, and this affects the ability to face challenges directly. We also have several blooming domains that grow regardless of economic trends.”

TEXT Maria Uurto
PHOTO Taina Syrjänen