EK Investment Survey 19.1.2010

Fixed investments by the manufacturing industry within Finland contracted sharply last year due to the economic crisis. According to the latest EK Investment Survey, the amount of fixed investments contracted by as much as 40 percent from the previous year’s level. Investments are not expected to pick up this year either; on the contrary, the value of investments is expected to diminish further by a around five percent. As a result, the investment rate will fall to a very low level, even though the industrial value added has also fallen significantly.

According to Statistics Finland, the amount of fixed investments in Finland totalled just over 4.0 billion euros in 2008. This was lower than the peak in 2007 but still above average for the decade since 2000. According to the Investment Survey, investments diminished radically last year to around 2.4 billion euros. In 2010 the amount of fixed investments is expected to total only around 2.3 billion euros. 

The energy sector has invested heavily in 2008-2010. Even if energy sector investments are included in the figures for the manufacturing industry, however, the total value of fixed investments still declined by approximately 15 percent last year. This year the total is expected to remain at the same level as last year, or approximately 4.9 billion euros.

The weak economic trend is reflected also by the large proportion of investments to replace old production capacity. As much as 41 percent of investments planned for this year will be replacement investments, whereas expansion investments will account for just 20 percent.

Foreign investments by the Finnish manufacturing industry in 2009 were in clear decline and ended at the lowest level of the decade. According to the Investment Survey, investments abroad amounted to just over 1.6 billion euros. The EU and North America accounted for over half of the total. Although the share of Asia and Russia has continued to grow, investments in developing markets also declined last year.

The number of personnel employed by the foreign subsidiaries of Finnish industrial companies was still growing significantly in 2008. Last year, however, the foreign workforce contracted in similar fashion to the domestic workforce. A total of 438,000 persons were employed abroad by Finnish companies in 2009.

The EK Investment Survey is part of the EU’s harmonised business trend survey system. A total of 278 industrial enterprises participated in the survey. Participating companies had combined net sales in Finland of approximately EUR 76 billion in 2008, and they employed over 180,000 people within Finland. The investments made by participating companies account for approximately 80 percent of all Finnish manufacturing industry investments. The figures used in the Investment Survey have been adjusted upwards to correspond to the recorded investments for the entire economy.
  

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