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Nordic Outlook: It seems the worst is over

Nordic Outlook is a quarterly publication that presents Danske Bank’s view on the economic outlook for the Nordic countries.


At a glance

The Nordic countries all took a severe economic hit in March and April as consumers and governments reacted to the spread of Covid-19 but compared to other European countries, the fall-out has been milder, largely due to different economic structures and a different approach.  

Nordics did not shut down factories or construction sites 
“The hardest hit industries such as hotels and restaurants are relatively smaller in the Nordics than in Southern Europe, but the milder fall-out is also down to differences in approaches.

The Nordic countries have not shut down factories or construction sites, trade in goods across borders has continued and with some of Europe’s most digital populations, people in the Nordics have largely been able to continue working and shopping from home,” says Las Olsen, chief economist in Danske Bank and editor-in-chief on Nordic Outlook.

Meanwhile, sound public finances means that the Nordic countries remains strong, fiscally, despite large government spending to cushion their economies from the crisis. This is particularly true for Sweden, Denmark and Norway, while Finland – although strong compared to other European countries - has more debt and longer term challenges. 

Compared to other European countries, the fall-out in the Nordic countries has been milder, largely due to different economic structures and a different approach.  

Las Olsen 

Chief economist, Danske Bank

Large risks remain
So far, Nordic economies seem to perform along the lines – or better – than what Danske Bank in March considered a ‘best case scenario’. But large risks persists. 

Global developments have been much more severe and the economic damage and losses in Europa and many emerging markets will question the strength of a Nordic rebound. Danske Bank’s economists are more optimistic than others, but cautiously so.  

“We expect economies outside the Nordics to recover most of the losses from the lockdowns relatively quickly, although it will be years before they recover fully. But we also warn that there is significant risk that we are wrong, or that a second wave of infections will cause a renewed crisis,” says Las Olsen.