Some of the downside risks in the global economy have diminished since our spring forecast, thanks to President Trump's trade deals and the fiscal agreement in the US. However, growth momentum in many countries remains weak, relying to some extent on fiscal easing as consumers and corporates continue to exercise caution. Most central banks have concluded their rate cutting cycles and seem to be on a steady path going forward.
The Nordic economies remain resilient amid global headwinds, supported by solid foundations. With the exception of Finland, the countries belong to the exclusive group of AAA-rated nations, characterised by robust public finances and solid external balance sheet surpluses. Despite downward adjustments to 2025 growth forecasts for Denmark, Finland and Sweden due to various factors, the outlook remains cautiously optimistic, says Helge Pedersen, Nordea Group Chief Economist.
We have revised our growth expectations for the Danish economy downward, partly due to historical growth figure adjustments and a decline in industrial production, including in the pharmaceutical sector. Nevertheless, the economy remains robust, with low unemployment, a substantial public budget surplus and low public debt.
Finland's economic growth has been delayed this year despite improved fundamentals. Lower interest rates and easing inflation boost purchasing power, but weak confidence hinders consumption and investment. Manufacturing shows signs of recovery, while construction remains sluggish. The economy awaits a turnaround, but progress is slow.
Norway's economy shows strong growth and a positive outlook despite global uncertainties. Increased household purchasing power is driving this improvement. Growth is expected to remain at or above trend, keeping unemployment low. High wage growth and inflation above the 2% target mean little room for further rate cuts.
Sweden's economy faces slower growth due to global turbulence but shows signs of recovery. Household confidence is rising, which we expect will boost spending. The resilient export industry benefits from global trade frameworks falling into place. Stronger economic conditions reduce the need for monetary policy easing.
Real GDP growth forecast, % year-on-year
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| 2024 | 2025E | 2026E | 2027E |
|---|---|---|---|---|
| World | 3.3 | 3.1 | 3.2 | 3.2 |
| Denmark | 3.5 | 1.8 | 2.3 | 1.9 |
| Finland | 0.4 | 0.5 | 1.5 | 2.0 |
| Norway (mainland) | 0.6 | 2.0 | 1.8 | 1.7 |
| Sweden | 0.8 | 1.2 | 2.5 | 2.2 |
| Source: Nordea Markets |
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For further information:
Helge J. Pedersen, Group Chief Economist, Mob: +45 22697912
E-mail: helge.pedersen@nordea.com
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