Recovery continues despite headwinds
Global news has not sounded positive for the Nordic growth outlook recently. The increasing risk of trade wars is not in the interest of small open economies and of Nordic businesses that are integrated into global value chains. Lower growth indicators in the euro area dampen the prospects for the most important markets for Nordic exports, and the political uncertainty in Italy also risks undermining European growth. However, while trade disputes can have large consequences for individual companies, they are unlikely to have a large GDP effect in the short run and even with the slowdown, the euro area is still growing above trend in line with our previous forecasts. Hence, we have not made major adjustments to Nordic growth based on the international backdrop.
A sharper slowdown is a risk more than a reality at this point, but a serious risk, as for example lower manufacturing growth in Germany also affects countries like Sweden and Denmark. Of course, there are also factors pulling in the other direction. A higher oil price supports oil investments in Norway, while Finland’s improved competitiveness is visible in the trade figures.