Over a year into the pandemic, what’s the economic outlook?
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The global economic recovery is picking up speed, on the back of the vaccine rollout and unprecedented government stimulus. Expectations of an economic surge, particularly in the US, have even sparked concerns about inflation and rising interest rates. The outlook is also bright in the Nordics, which have benefited from strong economic starting positions and a relatively good ability to contain the virus.
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Finland’s economic growth has been delayed this year. Economic fundamentals have improved, as lower interest rates and lower inflation improve consumers’ purchasing power. However, the long period of weak confidence in the economy continues to weigh on consumption and investment.
The monetary policy tightening initiated by the ECB in 2022 halted economic growth in Finland and sent home prices tumbling. So why isn’t the monetary policy loosening that began a year ago having a positive effect on the Finnish economy yet?
The previously high-flying Danish economy has had its wings clipped as historical growth figures have been revised lower and industrial production has declined, particularly in the pharmaceutical sector. Despite reduced altitude, the Danish economy is still very strong.