Chief economist: Strong growth in the Nordic countries over the coming years

In the year’s first issue of Economic Outlook, we outline a global economy which has largely shown resilience to the new international rules of play presented by the US administration in 2025. Neither international trade nor global economic growth has been noticeably affected, and the financial markets recovered quickly after the shock on “Liberation Day” on 2 April. 

Growth has been supported by an expansionary economic policy, more accommodative financial conditions and substantial investments in areas such as AI. These are factors that will continue to have an impact well into 2026, which is why we maintain our baseline scenario from the September forecast which indicates modest global growth of around 3% in the coming years. 

The services sector is still driving most of the growth, while the industrial sector has struggled to gain momentum. Nevertheless, we expect this to change as the currently very high savings rate, especially among European households, normalises. 

It is hard to see growth seriously derailing, but a range of events and factors could shift the balance of our cautiously optimistic outlook. 

A potential wild card is a peace deal between Russia and Ukraine. The need for reconstruction in Ukraine is enormous and will to a large extent have to be financed by European funds and companies. At the same time, peace in Europe could help lift the very weak consumer confidence and thus contribute to increasing growth in consumer spending. 

Conversely, the USA's focus on controlling the western hemisphere may give rise to heightened geopolitical uncertainty with possible consequences for, among other things, international trade and cooperation policy. 

This was made absolutely clear when President Trump announced new punitive tariffs on a number of European countries, including the Nordic countries, on January 16 as part of the campaign to take over Greenland from Denmark.

In the US, uncertainty about the implications of the Trump administration’s economic policy persists, and the November midterm election also carries a high degree of uncertainty. Midterm elections typically act as a gauge of support for the sitting president, giving Trump a relatively short window to deliver on his campaign promises if the Republicans are to maintain their majority in both chambers. If this does not happen, the US economic and political course may be adjusted once again. 

In our baseline scenario, we do not expect further rate cuts from the Federal Reserve (Fed), but the appointment of Jerome Powell’s successor as chair of the central bank is attracting considerable interest. President Trump has been open about his demand for lower US interest rates, and it is reasonable to expect that the new Fed chair will be responsive to the wishes of the White House. As a result, the debate about the Fed’s independence could flare up and trigger renewed turmoil in the financial markets.

This is not an issue in Europe, and we expect the ECB to keep the interest rate stable throughout 2026 and subsequently raise it twice in 2027. 

The politically stable and economically sound Nordic countries are relatively well positioned in a time characterised by disruption to the world order as we know it. We expect strong growth in all the countries over the coming years owing to the expected upswing in the European economy and substantial fiscal policy easing in Denmark and Sweden ahead of critical parliamentary elections in 2026. And we expect a single rate cut in Norway before the summer.