Nordea Economic Outlook: Weathering the storm

The global economy faces significant uncertainty due to President Trump’s tariff war with the rest of the world. We do not expect a global recession in our baseline scenario, and we believe that Europe, particularly the Nordic region, is well-positioned to weather the storm, says Helge Pedersen, Nordea Group Chief Economist.  

This resilience is primarily due to solid public finances and the large surpluses on external balances in most Nordic countries, with Finland being the exception. Furthermore, as small, open economies, the Nordic countries are used to navigating uncertain times, especially concerning foreign trade.

Denmark, as a small open economy, is typically sensitive to international developments. While the trade war poses challenges for Danish economic activity, the country is well prepared to weather the current global uncertainties. A substantial savings surplus, robust public finances and a flexible labour market strengthen Denmark’s resilience.

Finland’s budding economic growth faces potential setbacks from trade tariffs. While inflation and interest rates boost purchasing power, increased uncertainty may delay private consumption and investment. The housing market shows increased activity, but prices remain stagnant. Oversupply in rentals continues to deter new construction.

Norway’s economic growth is accelerating, fuelled by rising consumer spending and housing construction. A weak NOK benefits exports, while global trade tensions are expected to minimally impact Norway’s economy. Low unemployment and high wage growth will keep inflation above target. Norges Bank is unlikely to cut rates anytime soon.

Global trade tensions have affected Swedish households and businesses, but the impact on growth is expected to be limited. Favourable conditions support Sweden’s ongoing gradual economic recovery. While inflation may decrease next year, a stronger economic environment should reduce Riksbank’s need to ease monetary policy.

Read Economic Outlook here.

Real GDP growth forecast, % year-on-year

For further information: 

Helge J. Pedersen, Group Chief Economist, Mob: +45 22697912
E-mail: helge.pedersen [at] nordea.com (helge[dot]pedersen[at]nordea[dot]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.