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4 Jun 2025 – Insights

Nordic Outlook: Normalisation with tariff risks

US trade policy creates significant uncertainty, but the Nordic economies are expected to continue normalisation of growth, inflation and interest rates. This is one of the conclusions in the latest Nordic Outlook.



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In the new Nordic Outlook, Danske Bank expects economies to continue to normalise, which implies slightly higher growth in Europe in general, slightly lower growth in the US and an increase in consumer demand in China, while interest rates can be lowered further.

However, US trade policy creates significant uncertainty, and while the base scenario in the new outlook anticipates tariffs staying near current levels, many outcomes are possible.

“Behind all the noise from trade policies and tariffs, we continue to forecast normalisation across economies. Europe has managed a soft landing after a period of high inflation and we see that there is space for more consumption and a pick-up in investments,” says Heidi Schauman, Global Head of Research at Danske Bank, who also emphasise that tariffs continue to cloud the outlook:

“But tariffs are, of course, putting a lid on growth, and we do see that this is pushing down growth going forward.”

See Heidi Schauman explain more about the new Nordic Outlook:





Highlights from Nordic Outlook 

See Heidi Schauman, Global Head of Research at Danske Bank, explain more about the new Nordic Outlook or download the entire report.

Download Nordic Outlook

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Denmark: Room for more spending
In Denmark, GDP growth is set to remain high, driven by Novo Nordisk and other businesses with substantial production abroad, but there is also room for more domestic growth.

In the new Nordic Outlook, rising real wages and lower interest rates are expected to support private consumption, but the scale of consumption growth will depend on how consumers react to greater uncertainty.

Higher tariffs and less free trade are unequivocally bad news for a small, open economy like Denmark’s. However, in the short term, Danske Bank's new forecast expects that there is still a basis for growth in exports.

Sweden: Brighter outlook after volatile spring
In Sweden, the spring has been a volatile period characterised by high inflation and uncertainty surrounding tariffs, impacting consumer confidence and the housing market.

Looking ahead, the economic recovery is set to regain momentum in the second half of this year, aided by rising real incomes and lower interest costs.
The labour market in Sweden remains fragile but shows signs of a turnaround, with rising employment and fewer redundancies.



Our chief economists share their view on the Nordic economies


Denmark
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Sweden
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Norway
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Finland
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Norway: Strong start, but risks are looming
In Norway, growth picked up significantly in the first quarter, driven by strong growth in the rate-sensitive sectors and supported by public consumption. The big question is whether this will last as rate cuts are postponed, the global trade war will dampen global growth and oil investments are set to drop.

The labour market in Norway remains tight, driven by strong demand for labour, but higher productivity growth will probably imply a moderate increase in unemployment after all.

Inflation has been higher than expected, which has led to higher wage growth and a postponement of the announced rate cuts.

Finland: Rocky road to recovery
In Finland, the economy is gradually recovering, but consumer caution and the unpredictability of US trade policy are throwing obstacles in the path.

Prospects for growth in consumer demand are improving, supported by rising real earned income and falling interest rates. Rising unemployment and public sector expenditure cuts have dampened households’ appetite for consumption, but consumption is expected to grow later this year.

The flow of new export orders has increased in the first quarter, but concerns about a potential trade war overshadow the export outlook.

Nordic GDP forecasts

 Country

 2024

2025 

 2026

Denmark 
3.7% 3.2% (3.9%) 2.5% (2.9%)
Sweden
1% 1.6% (2.0%) 2.5% (2.5%)
Norway
0.6% 1.7% (1.8%) 1.6% (1.7%)
Finland
-0.1% 0.9% (1.1%) 1.7% (1.8%)

Paranthesis are projections from March 2025