Trust is the silent engine of economic growth

Finland’s economy has not stopped, but it is progressing cautiously. Consumers are postponing major decisions, companies are weighing their investments, and uncertainty is reflected in almost all value chains. Trust has become a critical factor for growth.

Jorma Rauhala, CEO of Kesko, and Kai Telanne, CEO of Alma Media, discuss how Finland’s economic growth can be accelerated in Alma’s Sustainable Growth Accelerator video podcast. The first episode focuses on why trust is a decisive lever for economic growth and what can be done to strengthen it.

Weak trust does not stop everyday life, but it slows down the future

A graph compiled by Alma on the development of industrial and consumer confidence in Finland over the past seven years served as the starting point for Rauhala’s and Telanne’s discussion (sources: Confederation of Finnish Industries and Statistics Finland). Consumer confidence has remained exceptionally weak for a long time – and although everyday consumption continues, the impact is clearly visible in major decisions requiring careful consideration.

According to Rauhala, there are significant differences in Kesko’s business operations. Daily grocery retail is stable by nature – people eat every day. In contrast, construction, housing, and car sales are directly dependent on consumers’ faith in the future.

“Residential construction practically came to a halt amidst Russia’s invasion, rising interest rates, and inflation, and although the worst is likely behind us, strong growth has not yet begun,” Rauhala describes the situation.

New car sales in Finland are at a historically low level, and the car fleet is aging. Factors influencing this include not only purchasing power but also uncertainty about the future: when is the right time to invest, with what power source, and in what economic situation?

Consumer caution is hardly due solely to rising prices. According to Rauhala, uncertainty about employment and personal finances has persisted, even though inflation and interest rates have already stabilized. Prolonged global uncertainty is one of the most significant reasons for unclear future prospects.

From Alma’s perspective, weak confidence does not mean a complete halt, but rather cautious behavior. Consumers’ daily spending appears to be quite close to normal, but major decisions, such as those concerning housing, car replacement, and durable goods, are being postponed.

“The same is visible in companies’ advertising investments: it is harder to commit to long-term commitments,” Telanne states and continues

“Thus, a lack of trust does not seem to completely kill demand, but it significantly slows it down.”

Predictability is the core of trust

Both Rauhala and Telanne emphasize the need for a long-term vision of Finland’s future and the kind of economic structure on which growth is to be built. In their discussion, they repeatedly return to one core theme: the predictability of public policy.

Companies make investments for decades ahead. For example, Kesko invests hundreds of millions of euros annually in retail locations, logistics, and infrastructure. Such decisions require confidence that taxation, regulation, and the operating environment will remain sufficiently predictable and will not change unpredictably from one election period to another.

“Companies do not expect a perfect situation. It is enough that there is sufficient predictability to make decisions and build a long-term strategy,” Telanne summarizes.

The same logic applies to consumers. When the outlook for one’s own employment, taxation, and the sustainability of public finances becomes clearer, confidence in the future will gradually begin to return. Building a more positive atmosphere in society is ultimately a shared task – and in this, companies also have their own important role.

Regulation erodes willingness to grow

The role of regulation also strongly emerges in the discussion. According to Rauhala, particularly nationally tightened EU regulation burdens companies in a way that does not support growth or responsibility.

He describes concrete examples of situations where time and resources are spent on interpreting and implementing regulations without clear added value for the environment, consumers, or businesses.

“Responsibility is very important to Kesko, and regulation is needed, but now it feels like we are regulating ourselves to death,” Rauhala says.

Telanne agrees with this view and reminds that in a small open economy, national applications should support competitiveness – not weaken it.

Trust is not born from words, but from actions

The summary of the discussion is clear: trust is a fundamental prerequisite for economic growth, but it requires consistent actions. When the operating environment is predictable, companies dare to invest, and consumers make forward-looking decisions. Without this, the engine of growth runs at reduced capacity.

The prerequisites for sustainable economic growth are not ultimately dependent only on economic cycles, but on whether we succeed in building a vision for Finland that both businesses and people can trust.

This article is a summary of Alma Media’s Sustainable Growth Accelerator video podcast. The topic of how Finland’s economic growth can be accelerated is discussed in three different conversations with Kesko’s CEO Jorma Rauhala and Alma Media’s CEO Kai Telanne. Watch all episodes (in Finnish)!

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