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How the war affected the finnish business economy

Kirjoittanut: Emilia Laakso - tiimistä Kaaos.

Esseen tyyppi: Yksilöessee / 2 esseepistettä.
Esseen arvioitu lukuaika on 3 minuuttia.

How the Russian war affected the Finnish business economy


The war between Russia and Ukraine has had a huge effect on the economic growth of Finland and pushed up inflation, according to the Bank of Finland.

Finland’s economy was making progress in recovering from COVID-19 until the war started and slowed down Finland’s economy. The economic growth of Finland will decrease to 0.5%-2%. Growth will increase by 1.5% in 2024 as soon as the global economy moderates. Because of the war gas prices have increased in Finland. The main things the war has affected are exporting and importing products/goods to and from Russia. The availability and higher cost of energy and raw materials from Russia.

Finnish Companies

 According to the Finnish Ministry of Economic Affairs, roughly 2,200 Finnish companies exported to Russia. Mainly manufacturing industries suffer from rapidly rising costs and supply chain problems.  A survey result shows that most Finnish companies believe they will regain lost volume exports by raising sale prices. (Valtioneuvoto. fi, Bank of Finland)

“The Finnish economy was taking off. Then Russia’s invasion of Ukraine blurred the outlook and turned the takeoff into a gradual economic slowdown and accelerating inflation. In the longer term, the effects of the war will merge into the structural change in the economy and society,” says Mikko Spolander, Director General of the Economics Department.

Export and foreign trade

Foreign trade has severely collapsed due to the war. Many companies had loads of business activities in Russia. Russia marked 5.5% of Finland’s exports. Due to the war if not all then most companies had to completely stop most of their operations. In the past years, an estimated 10-13% of imports arrived from Russia and most of the imports were raw materials for example timber, raw wood material & petroleum.

(Sttk. fi)

“Cost-competitiveness will play an important role in how companies can adjust as they try to find new markets to make up for lost business in Russia. If they do not succeed in this, the risk of a recession will grow,” said the Bank of Finland’s Head of Forecasting, Meri Obstbaum.

High energy and raw material prices (Bank of Finland bulletin)

Finland has loads of renewable energy sources. Statistics tell that huge amounts of energy have been imported from Russia to Finland. A large part of energy imported from Russia is petroleum (crude oil). Finland can easily replace Russian oil with oils from other countries.

One of the biggest threats to regional economic development is the great rise in energy prices. Agricultures have a problem because of the rising prices of energy and fertilizers. A somewhat positive side to this is this is speeding up investments in renewable energy.

Finland’s largest energy company Fortum, owned power plants in Russia. Due to the war, Fortum announced that they would not continue doing business with Russia. Fortum will no longer purchase fossil fuels, biomass, or pellets from Russia for Fortum’s power plants located in Espoo and Meri-Pori.

“First, the coronavirus pandemic and then Russia’s attack on Ukraine reduced predictability. Rising prices will be a major challenge for both companies and households. Many regions are uncertain about future economic developments, but fortunately, we are well-prepared in different sectors of society and the cogs of the economy are turning. The current situation requires creative solutions from all of us. However, I want to create trust in the future to get us through this too,” says Minister of Economic Affairs Mika Lintilä.

Future with Russia

 Finland and the EU need to find a way to coexist peacefully again. The unstable political situation in Russia has a negative effect on the desire of people and companies to continue operating in Russia. Unfortunately, the return to the Russian market and investments will still take many years.

Can Russia be trusted again?

 It is very difficult to change people’s minds, If we remember our ancestors who were in the war against Russia and their children, they did not have a strong trust in Russia after the war. The influence of Russia after the war on Finland’s domestic and foreign policy was also strong. Now just when the business of many Finnish companies was on a very high rise and speed in Russia, Russia itself destroyed them. Building and creating a new trust may take decades.


The war has caused Ponsse, a Finnish forest machine manufacturer company to stop exporting their machines, services, and spare parts to Russia. Ponsse was founded in 1970 its turnover in 2021 was 582 million euros and it employed almost 1,000 people. The share of Russia and Belarus in Ponsses turnover has been around 20% 1.2. remarkably large. On June 28, 2022, Ponsse announced that it would give up all business in Russia. This has caused the company’s cash flow and profitability to decrease.

“The situation is highly polarized. Ponsse’s market situation has so far been relatively good in its main markets, but the stoppage in exports to Russia and local maintenance activities has made a massive impact on our operations, profitability, and cash flow. In the short term, the Russian market is too large to be replaced. Due to the changes in our operating environment, we are forced to slightly downscale our production volumes and streamline our operations,” says Juho Nummela, President and CEO of Ponsse Plc.






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