The outlook for the Nordics is fine
(Thomson Reuters ONE) -
The outlook for the Nordic economies is still fine though clear signs have now
emerged of an international slowdown. A Nordic advantage is the good starting
point for public finances in all the Nordic countries ahead of the Big
Recession. This means that the need for radical fiscal policy austerity measures
is much smaller here than in most other countries.
The Danish economy has returned to the growth path. The improvement has been
aided by consumers now emerging from the shadow of the financial crisis and
starting to loosen their purse strings again after being bolstered by income tax
cuts and record-low interest rates. Moreover, exporters have finally started to
benefit from the decent global upswing. And public spending, while still making
a positive contribution to growth, is passing the "growth baton" to the private
sector. The labour market situation has improved in 2010, but we do not expect
the unemployment curve to finally break until early 2011. We see a modest
improvement of the housing market with increasing trading activity and rising
prices underpinned by the low level of interest rates.
The Swedish economy started to recover in mid-2009 and gained further momentum
in 2010. GDP is seen growing by more than 4%. The export industry has benefitted
from the improvement in global trade. Even if the international economy slows
down, domestic demand in Sweden will contribute to sustaining growth. Industrial
production is rising and the order inflow indicates that the upswing will
continue. The labour market is improving and public finances have strengthened
along with rising employment and is heading for balance as early as this year.
The household sector is in good shape and car sales have surged. Inflation is
subdued, but should pick up slightly in the next few years. The Riksbank started
to hike the repo rate in July and further hikes are in the pipeline. We expect
the repo rate to reach 1.25% at the end of 2010 and 3% in two years' time.
The Norwegian economy has disappointed so far in 2010 due to the households
which seem to have been more prone to save rather than spend than we thought.
Our view on the economy in 2011 is only marginally changed, and we still expect
a modest upswing. The smaller-than-expected pick-up in interest rates and
higher-than-expected oil investment will to a great extent compensate for the
more cautious-than-expected consumer behaviour. In 2012 we see growth in Norway
accelerating sharply, driven by stronger global growth and higher oil prices.
Any pick-up in Norwegian interest rates should be very modest, but they will
begin to head higher before their Euro-area equivalents, and this should
underpin a stronger NOK.
After a slow start in 2010, the Finnish economy began to gain momentum in the
spring. Also, the outlook for the rest of the year is favourable. Next year,
growth will begin to slow down relative to the brisk figures of H2 2010. In
2011, average GDP growth will be a little slower than this year. On the whole,
the trend in Finnish economy will be reasonably favourable in the next few
years. Despite the broadness of the past recession, its impact has been fairly
mild. GDP growth fell sharply, but the level of unemployment remained much lower
than feared. Moreover, the general government deficit probably stayed below the
EU's 3% target, and next year the general government finances will again be
close to balancing.
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For further information: Helge J. Pedersen, Global Chief Economist, +
45 33 33 31 26
[HUG#1441031]
Press release (pdf):
http://hugin.info/1151/R/1441031/385429.pdf
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Source: Nordea via Thomson Reuters ONE
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Datum: 30.08.2010 - 09:02 Uhr
Sprache: Deutsch
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