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Nordic Outlook: Return to Nordic growth

Declining inflation, lower interest rates and higher spending power point to a gradual return to normal growth over the coming years in the Nordic economies. This is one of the conclusions in the new Nordic Outlook.

Global major economies have performed better than expected and much better than feared last year, with strong growth instead of recession in the US and growth in China despite housing market problems.

Inflation has declined faster than expected in many economies, including many European countries where growth also has been stronger than feared.

The path is open for cautious interest rate cuts over the coming years and according to the new outlook, the European Central Bank (ECB) is expected to lower the policy rate three times in 2024 starting in June.

“The world continues to be beset by violent conflicts, and geopolitical tensions between great powers continue to create uncertainty. In 2024, elections will be key and especially the election in the US create uncertainty about the political future. But all is not doom and gloom. 2023, as an economic year, was actually surprisingly good. Labor markets stayed strong everywhere and inflation came down quite rapidly,” explains Heidi Schauman, Global Head of Research, Danske Bank.

In the video, Heidi Schauman explains more about the outlook for 2024.


Denmark: Growth on the cards – also ex. Novo Nordisk
The Danish economy performed much better than expected in the wake of high inflation and massive interest rate hikes. Much of the reason is the huge success of pharma giant Novo Nordisk, which growth is pushing overall activity levels up, while much of the rest of industry and housing construction have contracted.

Inflation has fallen sharply in Denmark – in part due to temporary effects, and is expected to tick up slightly again. However, in the outlook, a gradual return to more broadly based growth in the course of 2024 and 2025 is expected, helped along by interest rate cuts and increasing private consumption.

Sweden: On the verge of recovery
Turning to Sweden, the Swedish economy is being driven by strong exports of goods while domestic demand is slightly weaker. Unemployment is slightly rising, even though the labour market remains resilient.

Excluding housing costs, inflation momentum has fallen markedly and the first policy rate cut from the Riksbank is expected to come in June.

Our chief economists share their view on the Nordic economies













Norway: Growth and inflation both slowing
Looking at Norway, there are still clear signs that both growth and inflation are slowing. Negative real wage growth and higher mortgage rates are strong headwinds for households, particularly impacting private consumption and housing investment.

Unemployment is continuing to rise moderately, although it is still at low levels.

Interest rates are set to come down – the question is when and how far? According to the outlook, Norges Bank is expected to leave the policy rate unchanged in March and May, but deliver a first cut at its meeting in June.

Finland: Economy limping along towards an upswing
Looking towards Finland, the Finnish economy is still in recession, but it is expected to pick up during 2024 as a result of private consumption supported by falling inflation and interest rates and the gradual reinvigoration of export demand.

The Finnish labour markets remain fairly steady even though some sectors will reduce workforce. Many companies are still struggling with labour shortages and wages are expected to rise faster than in recent years.

Nordic GDP forecasts




1.8%2.1% (1.0%) 2.0% (1.6%)
0.2%1.5% (1.3%) 2.0% (1.8%)
1.1%1.1% (1.1%) 2.1%  (2.1%)
-1.0%-0.4% (0.3%) 1.9%  (1.9%)

Paranthesis are projections from December 2023.