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Nordic Outlook: Higher growth and lower interest rates

The new Nordic Outlook paints a mixed picture of the Nordic countries but the overall outlook remains for both higher growth and lower interest rates, writes Danske Bank’s macroeconomists in new analysis.

The latest edition of Nordic Outlook strikes a mostly optimistic tone for the major economies.

Economic data has been better than expected in the US, in Europe and in China and growth are exceeding expectations. So what about the inflation? 

“We expect that inflation will continue to move towards the targets around 2 percent, but the road will be bumpy and uneven, as it has been over the past months as well. Especially services inflation and wage inflation creates risks around the inflation outlook and could also be the factor that lessens the risk appetite by central banks, so that central banks do now want to cut as much as has been priced in earlier,” says Heidi Schauman, Global Head of Research, and elaborates:

“Currently, we forecast two rate cuts by both the Fed and the ECB in 2024, slightly less for the ECB than what we thought a few months back”.

Heidi Schauman explains more about the outlook in the video:


Looking at the Nordic countries, the picture is more mixed, but the overall outlook still points to both higher growth and lower interest rates.

Denmark: Broadening growth 
Looking at Denmark, the economic data are strong: GDP grew by 1.9 percent in 2023, inflation fell to 0.8 percent in April, unemployment is low, and businesses are competitive – to mention just a few of the highlights.

Yet, Danish consumers and businesses are not particularly positive when asked for their views on the economy by Statistics Denmark. This can be seen in relation to most wage-earners purchasing power is lower now than three years ago, and growth is very concentrated around Novo Nordisk, while the rest of the economy stagnated in 2023 overall. 

However, in new outlook, this perception is expected to brighten going forward. Higher real wages, lower interest rates, still subdued unemployment and rising house prices will support households, while growth appears to be broadening to include more businesses.

Sweden: Headed for an upswing
Despite concerns about Swedish growth in the light of weakness in neighbouring countries such as Sweden’s largest trading partner, Germany, most indicators suggest that Swedish exports will continue to perform well.

Bankruptcies are record-high in Sweden, but they are currently having only a mild effect on unemployment because the firms going under are mostly microenterprises with very few employees.

Unemployment continues to rise and hit 8.4 percent in April. However, this is mainly because of large inflows of people who were previously outside the labour force, rather than people losing their jobs.

In March and April, inflationary pressures in Sweden dropped well below the Riksbank’s expectations and the Riksbank made a first policy rate cut in May and is signalling a further two in the second half of the year.​​

Our chief economists share their view on the Nordic economies













Norway: Growth picking up
Looking at Norway, the growth is picking up but still below trend. Exports, oil investments and government demand are making positive contributions, whereas private consumption and investment are pulling the other way.

The headwinds from higher interest rates are fading, and the combination of lower inflation and higher wage growth is expected to increase households’ purchasing power.

According to the outlook, Norges Bank is expected to keep the policy rate unchanged at 4.5 percent at its meetings in June and August before delivering a first cut in September.

Finland: Tentative signs of a turnaround
Looking towards Finland, the Finnish economy recovered from a technical recession at the beginning of the year, but the labour market and low confidence indicators suggest that the economy remained sluggish in the second quarter. 

However, private consumption supported by falling inflation and the gradual recovery of export demand is expected to set the economy on a growth path during 2024.

The Finnish Labour markets remain steady and even though some sectors will reduce workforce, many companies are still suffering from a shortage of skilled labour.

Nordic GDP forecasts




1.8%2.1% (1.0%) 2.0% (1.6%)
0.3%1.5% (1.5%) 2.0% (2.0%)
1.1%0.9% (1.1%) 2.0%  (2.1%)
-1.0%-0.4% (-0.4%) 1.8%  (1.9%)

*Forecast. Paranthesis are projections from March 2024