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Annual Report of the Board

                                                                             Seafarers’ Pension Fund 2021 Annual Report

Financial Operating Environment                                              Insured persons

Finland’s gross domestic product (GNP) increased by 3–4% in 2021.               Prs  7,350 7,310 7,405
The strongest growth was seen in goods exports as a result of the            10,000                               6,363
strengthening of the global economy, stimulus measures and an                                                                5,709
increased demand for Finnish export products within key trade areas.          8,000
The various restrictive measures related to the COVID-19 pandemic
continued to have an effect on travel, hospitality and catering, and this     6,000
was also reflected in the number of maritime passengers.
                                                                             4 ,000
   COVID-19 retained its grip during 2021 with several new waves of
the pandemic. Even though the vaccination coverage had already risen         2 ,000
to a good level within developed countries, the new variants caused new
peaks in infection rates. On the other hand, the symptoms caused by          0
the new variants were weaker and the need for hospital care remained                  2017 2018 2019 2020 2021
within tolerable limits. As a result of the supply chain disruptions caused
by the pandemic and the strong growth in demand, producer prices             Pension recipients
rose dramatically and inflation accelerated to the highest levels seen in
decades. The year-on-year change in consumer prices in Finland was              Prs  8,302 8,219 8,159 8,122 8,001
3.5% in December and, for example, prices in the USA increased by 7%,        10,000
which was the highest level in 40 years.
                                                                              8,000
   Towards the end of the year, the acceleration of inflation was viewed
as being a longer-term challenge and it began to affect interest rates. At   6,000
the same time, expectations concerning the tightening actions of the
central banks increased. This applied both to interest rate increases and    4 ,000
the reduction of central bank balance sheets, the size of which rose to a
relative level comparable to that seen during WWII. Another matter of        2 ,000
concern was the tightening of the geopolitical climate.
                                                                             0
   These new risk factors did not yet affect the investment market in                 2017 2018 2019 2020 2021
2021. The global stock index yielded as much as 32% as spurred by the
strengthening US stock market and dollar. In Europe and Finland, share
prices by about 25%. Expansive monetary and fiscal policies increased the
values of most asset classes, and expectations of interest rate increases
were negatively reflected mainly in government bond yields.

   The strong demand for residential properties continued, and the yield
requirements continued their decline. In the rental market, the strong
building trend began to cause local over supply and put pressure on
rental prices. Corona restrictions continued to affect, for example, hotels
and restaurants, and shopping centres felt the impacts of the increase
in online shopping. The increase in remote working was reflected in the
increased interest to convert office premises into residential facilities.

   According to the shipowners barometer 2021 (‘Varustamobarometri
2021’), which focuses on freight traffic, the trend outlook for maritime
transport markets rose to a new record level (balance figure 86).
In addition to increased export and import demands, the prices of
maritime transports and fuel costs have also risen steadily. The biggest
challenge is the availability of competent employees for onboard work.
Over the next 24 months, investments are anticipated to increase
significantly, reflecting not only the good demand situation but also the
green transition. The greatest challenges in terms of transitioning to the
use of low-carbon fuels/energy is their price and limited availability.

   Maritime transport is the most environmentally friendly mode of
transport, with emission levels varying between 3–20 g/tkm, depending
on the vessel type. For comparison, the emission levels in Europe are

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