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New analysis: The Nordic economies are past the peak

Higher interest rates, risk of recession, and consumer spending eroded by lower real incomes all point to a weaker outlook for the Nordic economies, writes Danske Bank’s macroeconomists in their latest Nordic Outlook analysis.




The global situation is very uncertain due to the war in Ukraine, Chinese supply chains healing after the latest Covid outbreak and a recession likely around the corner in the US that could become deep. This also affects the Nordic economies, which are past the peak: 

“Since our last Nordic Outlook, inflation has risen dramatically in the Nordics from already high levels. The inflation is partly caused by energy and commodity prices, partly by second-round effects as companies pass on the costs to consumers. Such effects could be seen as temporary, but it is also clear that global demand is running ahead of global supply, and it is necessary to contain it through higher interest rates,” says chief economist at Danske Bank, Las Olsen in the newly published Nordic Outlook report.


The inflation is partly caused by energy and commodity prices, partly by second-round effects as companies pass on the costs to consumers.

Las Olsen

Chief Economist, Danske Bank



To varying degrees, the Nordics currently have heated economies where production is constrained by shortages of material and labour, and there are many jobs vacant. That will to some extend soften the blow from weaker demand caused by the raising interest rates and eroded consumer spending.

High uncertainty
Las Olsen emphasizes that the Nordic Outlook is associated with very high uncertainty:

“The big surprises in inflation numbers in recent months are a reminder that the current situation has low predictability and that major risks surround the outlook. We expect that the rise in interest rates will slow or reverse the rise in house prices across the Nordics, but we do not have a lot of experience with rate rising from such low levels. We expect reasonably stable consumer spending, but might see a big negative reaction, as consumers generally report low levels of confidence,” he explains.