Nordea Economic Outlook: Not there yet

So far, the global economy has been remarkably resilient to significant monetary policy tightening. Inflation is still high, and there is a good chance monetary policy will need to be tightened further before central banks can declare victory over inflation. Growth prospects remain moderate and subject to high uncertainty, says Helge Pedersen, Nordea Group Chief Economist.  

The Nordic economies show some divergence, with the countries at different stages of the economic cycle. The labour markets have shown surprising resilience in all Nordic countries, but we expect a cooldown in the coming period, with lower activity and higher unemployment.

The Danish economy has been on a remarkable growth journey, reaching the highest employment level ever. Signs of an impending slowdown are showing, due to much higher financing costs and a downturn in key export markets. But the dampening will likely be relatively mild.

The Finnish economic outlook is challenging, despite a good first half of the year, spurred by growth in the service sector. The slump in the housing market is causing a slowdown in residential construction, and sluggish global demand is hurting the manufacturing sector.  

The Norwegian economy is cooling down as households and house prices start to feel the pinch of rate hikes. We expect Norges Bank to reach its peak policy rate of 4.25% in September. But don’t expect inflation to fall towards its 2% target anytime soon.

The Swedish economy is likely to shrink this year, as tight monetary policy weighs on domestic demand and the export industry. Inflation is falling, and we expect Riksbank to cut interest rates next year, providing some relief for challenged households and businesses. Still, the coming years will be characterised by subdued economic trends and rising unemployment as households and businesses adjust to a permanently higher interest rate level.

Read Economic Outlook here.

GDP growth forecast, % year-on-year

For further information: 

Helge J. Pedersen, Group Chief Economist, Tel: +45 55471532 | Mob: +45 22697912
E-mail: helge.pedersen@nordea.com

We are a universal bank with a 200-year history of supporting and growing the Nordic economies – enabling dreams and aspirations for a greater good. Every day, we work to support our customers’ financial development, delivering best-in-class omnichannel customer experiences and driving sustainable change. The Nordea share is listed on the Nasdaq Helsinki, Nasdaq Copenhagen and Nasdaq Stockholm exchanges. Read more about us at nordea.com.

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