Skip to main content
3 Jun 2026 – Insights

Nordic Outlook: Ripple effects from the Strait

The energy price shock stemming from the war in Iran is likely to push inflation higher and dampen growth. However, the macroeconomic environment differs markedly from the situation in 2022, which could result in a more moderate impact on the economy. This is one of the conclusions in the latest Nordic Outlook.




Uncertainty is massive and the most important factor for the near-term economic outlook is the Iran war and the oil price outlook.

However, the increase in the oil price will not automatically lead to a sustained increase in inflation, that will depend on the economic situation and how expectations are affected.

“A big question at this point is whether the current energy crisis will also lead to a more lasting inflation problem, which could happen if it triggers a self-fulfilling expectation of further increases in the price level among households and businesses,” says Heidi Schauman, Head of Research at Danske Bank, and elaborates:

“Having just been through the high inflation episode of 2021-2022, people may be quick to adjust their expectations upwards again. However, that inflation came at a time of a severely overheated global economy. This time, the major economies are more balanced, and it will be more difficult to push through price and wage increases.”

See Heidi Schauman explain more about the 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

1f87f80b-8b5d-4e5f-b59b-e256a088b93e


The Nordic countries
In the Nordic countries, the higher energy costs are also taking the top of the growth outlook, even though the economies are less dependent on oil than the European average. Nevertheless, the outlook for the Nordic countries is still rather benign according to Chief Economist and Editor-in-Chief of Nordic Outlook, Las Olsen.

See Las Olsen explain more about the outlook for the Nordic countries.


d4ee0081-7bf7-4b62-8ee7-91f17e72ea67
Denmark: Growth is rather dull beneath the shiny surface
Headline GDP growth is very high in Denmark, but this does not say much about the reality for most businesses and consumers, who are only experiencing moderate growth.

There is room for increasing private consumption, even though higher energy prices are a cost and the indirect effects from energy prices are expected to further increase inflation. There continues to be growth in both employment and the labour force, resulting in quite stable unemployment.

Sweden: Continued recovery despite rising risks
Sweden’s recovery remains solid with favourable domestic fundamentals and low early 2026 inflation boosting purchasing power, though geopolitical tensions and future inflation risks cloud the outlook.

Housing activity and credit growth are strengthening, which can be interpreted as households having adjusted to the current interest rate environment. The Swedish GDP is near trend and growth is expected to be above normal in 2026-2027, with a cautious but improving labour market.




Norway: The growth outlook weakens
In Norway, growth is weakening on higher inflation, interest rates and lower global growth whereas inflation is lifted by energy costs, wage growth and inflation expectations. Rate sensitive sectors are expected to be hardest hit, and unemployment to rise. Eventually, lower energy prices and weaker growth are expected to cool down inflation and leave room for lower rates.

After a strong start to the year, the NOK will probably face headwinds from lower energy prices, weaker growth and a stronger dollar.

Finland: Growth continues despite the oil and interest rate uncertainty
The Finnish economy recovered at a solid pace leading up to the war in Iran. Higher energy prices and mortgage rates weigh on households’ disposable income, but wage growth is still expected to outpace inflation on average.

Labour market conditions remain weak with no imminent recovery in sight, but even cautious stabilization supports the growth outlook. Finnish export demand has remained solid despite the trade war uncertainty, and export competitiveness has improved.

The information in this article reflects the bank's general market expectations and should not be considered as advice. If you would like advice regarding your company's financial options, please do not hesitate to contact us.


Need financial advice?

Leverage Danske Bank’s knowledge and experience – we provide insights, input and analysis to help your business make well‑informed decisions.

LC&I
Denmark
Norway
Sweden
Finland