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Operating environment

Slight recovery in the global economy towards the end of the year 

In 2014 the global economy grew more slowly than expected. Despite uncertainty, the US economy already  showed signs of recovery towards the end of the year. Cautious growth was also predicted for the euro area after two negative years.

Due to the industrial structure and declined competitiveness, the situation for Finland was not as promising. In autumn, the Ministry of Finance predicted a very moderate upswing in the economic cycle. According to the preliminary statistics compiled by Finnish Customs, the exports of Finnish goods in January–September remained at the same level as the year before. Exports to the EU Member States rose by six per cent, but exports to countries outside the EU declined by seven per cent.

The economic situation posed challenges both to enterprises operating on the domestic market and to export companies. Uncertainty in the global economy dampened the willingness to invest, make growth plans and take risks.

A new normal situation on the financial market

Circumstances on the financial market have permanently changed following the financial crisis. Owing to stricter bank regulation, banks concentrate even more closely on the business operations and customer relations that yield the best return on the bank’s equity and keep solvency at least on the level required by the regulatory authorities. In consequence, some companies are unable to obtain financing even for good projects if their balance structure is weak and they lack sufficient collateral.

During the recession, the solvency of many companies has fallen below the level required by banks. This may have blocked the access to financing, at the same time stifling any nascent growth. According to the results of the SME barometer survey conducted in autumn, the general availability of financing has not changed, but three out of four companies reported that the conditions for obtaining financing have become more rigorous. The three most important changes pertaining to financing, as listed by the respondents, were the increase in loan margins, the more stringent collateral requirements, and the requirement for a larger share of self-financing.

Stiffening international competition and challenging financial markets present Finnvera with diverse expectations: on the one hand, Finnvera is expected to provide financing when it is not available on the market; on the other hand, financing should have an impact on developing the competitiveness of Finnish enterprises. International comparison reveals that many Finnish SMEs could improve their systematic approach and management of their economy. Without these, they can hardly gain enough growth in exports. In its operations, Finnvera must constantly balance between expectations that may even be conflicting. For this reason, corporate analyses are becoming more and more important.

The current situation on the financial market – the new normal – also makes it more difficult to arrange financing for the customers of Finnish export companies. Competition is stiff concerning both the competitive pricing of export products and the arrangement of financing for the buyers of these products.

Geographical tensions impaired prospects

Russia’s decreasing economy and the Russo-Ukrainian crisis burdened Finnish companies that trade with Russia. In addition to the impacts of sanctions and retaliatory sanctions, it became more difficult for Russian enterprises to acquire financing from Russian banks. In consequence, Russia’s imports and investments shrank.

Owing to the flagging Russian economy and the decline in Finnish exports, Finnvera’s commitments for trade with Russia fell slightly during the period under review. Finnvera can still cover political and commercial risks in projects carried out by Finnish exporters in Russia. Finnvera complies with the sanctions adopted by the EU and always assesses the possibilities to participate in projects on a case-by-case basis.


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