Government outlines COVID-19 scenarios with a focus on the coming years
There are major uncertainties associated with the COVID-19 situation in spring 2021. Despite the uncertain situation, it is important to assess the long-term effects of the COVID-19 epidemic on society. Therefore, the central government has drawn up three scenarios for the development of the pandemic and the impact it will have on society over the next few years. The scenarios outlined here are not forecasts, but rather alternative paths of development based on calculations and assessments. The Government has used them in drawing up its plan for lifting the restrictions imposed due to COVID-19.
The medium-term and long-term COVID-19 scenarios describe three possible paths of development of the epidemiological situation in Finland and the world and assess the effects the situation will have on society from summer 2021 until the end of 2023. The work also includes a qualitative overview of the impact of the epidemic in 2024–2026. The scenarios describe the effects of the epidemic with regard to the economy, healthcare and social welfare services and the population in general.
The work on formulating the scenarios was led by the Prime Minister’s Office in cooperation with the Finnish Institute for Health and Welfare, the Ministry of Social Affairs and Health, the Ministry of Finance, the Ministry of Economic Affairs and Employment and the Ministry of Education and Culture.
The three scenarios are the following:
- The epidemic will be under control in Finland and globally by summer 2021
- The epidemic will be under control in Finland by summer 2021, but it will take until 2022 to gain control of it globally
- Gaining control of the epidemic will be delayed until 2022 both in Finland and globally.
In the first scenario, the situation will begin to return to normal by June–July. Vaccinations will progress as planned and restrictive measures will help to curb the spread of the epidemic in the spring. The impact of the epidemic in winter 2021–2022 will be mild. The baseline scenario in the Ministry of Finance’s economic forecast from December 2020 was based on this scenario. In this scenario, society would operate normally starting in the autumn without significant restrictions on or disruptions to economic activity, services or social interaction.
In the second scenario, the epidemic will be under control in Finland at the start of autumn 2021, meaning that the situation in Finland corresponds to that described in scenario 1. Life in Finland will return to nearly normal in around June and July, and the epidemic situation will not get significantly worse after this. Globally, however, the epidemiological situation will be prolonged, and the situation in developing countries may be particularly difficult. This creates uncertainty, which also affects Finland, particularly through international trade.
In the third scenario, gaining control of the epidemic will be delayed for one reason or another both in Finland and abroad. An essential aspect of this scenario is that the epidemic situation will continue to be challenging at the end of 2021 and will not subside until 2022. As a result, the recovery of the economy and society will also be delayed.
Risk of compounding problems related to wellbeing; economic impacts moderate
According to the calculations included in the scenarios, the economic impact of the epidemic will not be particularly serious when it comes to GDP development or the overall economy in any scenario. That said, certain sectors and businesses will face difficulties. By contrast, all of the possible paths of development are cause for strong concern about the compounding of problems related to wellbeing and the risk of a prolonged need for services. There are risks related to the future, especially for children and young people.
In the middle of the decade, the challenge will be that the issues that existed even before COVID-19 will become more severe as a result of the crisis. For example, there will be an increased amount of public debt, while the need for healthcare and social welfare services may have increased. As a result of the crisis, the situation of already disadvantaged people may have deteriorated in a way that will last a long time. In this situation, the importance of labour productivity growth is even greater than before. At the same time, the digital transformation has taken a leap forward, which is creating pressure for change particularly in the trade sector, where a significant proportion of existing jobs will disappear over the course of the 2020s.
In order to tackle these challenges, we must work simultaneously to promote economic growth, ensure the sustainability of public finances, organise cost-effective healthcare and social welfare services and prevent inequalities.
It is worth noting that the crisis has also had some positive effects, such as boosting the development of digital services and operating models.
Inquiries: Jouni Varanka, Ministerial Adviser, Prime Minister’s Office, tel. +358 295 160 177, and Liisa-Maria Voipio-Pulkki, Director of Strategic Affairs, Ministry of Social Affairs and Health, tel. +358 295 163 382