The global economy is holding up remarkably well despite the impact of higher energy prices caused by war in the Middle East, and Danske Bank is mostly revising up the outlook for both the major and the Nordic economies in the new Nordic Outlook.
A surge in AI-related investment is supporting demand in the US and globally and should remain an important source of growth over the forecast horizon, although its longer-term impact is uncertain.
“Both energy markets and the AI demand present positive and negative risks to the outlook and beyond the near term, large public deficits and debt, the delayed green transition, weaker trade cooperation and geopolitical conflict remain serious concerns,” says Heidi Schauman Head of Research at Danske Bank, and explains why the global economy is still in a relatively benign state despite the higher energy prices.
“An important reason why the global economy is still in such a relatively benign state is that the starting point going into the shock of the Iran war was quite balanced. Inflation and unemployment were neither high nor low, and economic growth and interest rates were around what was estimated to be their potential levels, although of course with exceptions,” she says.
See Heidi Schauman explain more about the outlook:
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