The fact that the coronavirus disaster is different from previous crises shows governments, companies, as well as individuals, should be prepared to deal with a wide range of dangers, said the man leading the buffer fund behind Finland’s central government pension scheme.
Timo Löyttyniemi, the newly-returned chief executive officer of the State Pension Fund of Finland (Valtion Eläkerahasto, VER) also said crises represented opportunities, and that his country was well prepared in that it had good teleworking and digital capabilities.
Löyttyniemi said in a blog: “The coronavirus crisis is different from both past and future crises. This underlines the importance of being prepared for a wide range of threats.”
One lesson that could be drawn was that states, companies and individuals should all build up buffers, he said.
The CEO, who came back to head up VER this month after five years in Brussels as vice chair of The Single Resolution Board (SRB), said people were tending to seek guidance from the past in the current pandemic.
But he said previous viral outbreaks such as SARS in 2003 and Spanish flu in 1918 had taken place in different economic environments.
“While virus-induced diseases have something in common, it is impossible to draw any straightforward conclusions as to the development of the economy and the equity markets,” he said, as each economic environment had its own special features.
Löyttyniemi said each crisis was also an opportunity.
“Finland’s preparedness for this crisis is high. We lead the way in teleworking and rank among top European countries in terms of digital capabilities,” he said, adding that this gave Finland, Finnish companies and citizens ability to continue operations without disruptions and harness the opportunities offered by this competitive edge in the next few months.
But he also warned: “A crisis sows the seeds of the next one.”
Economic uncertainty and an imminent downturn as well as falling share prices and the emergency steps being taken by governments made the economy fragile, he said.
“If prolonged, uncertainty will undermine economic prospects,” Löyttyniemi said, adding that indebtedness would grow and it would become increasingly difficult to deliver on promises.