Nordea Economic Outlook: Consumer comeback
Global growth continues at a moderate pace. The US has received a boost after the presidential election, while Europe is lagging behind. Economic uncertainty is high, increasingly driven by political developments. Central banks' monetary policy interest rate cuts are nearing their end, according to Helge Pedersen, Nordea Group Chief Economist.
In the Nordic region, uncertain export conditions highlight the importance of domestic demand for future growth. We expect private consumption to rebound strongly across the Nordics, supported by favourable job prospects, falling interest rates and rising disposable income.
Denmark's economy is strong, with inflation under control, record employment and robust public finances. However, challenges include low consumer confidence, weak residential construction and uncertain export prospects. Nevertheless, we expect solid growth in 2025, supported by rate cuts and increased purchasing power.
The Finnish economy shows modest growth, but the economic cycle remains weak. Consumers are still cautious, despite improving purchasing power and falling interest rates. The contraction in the housing sector has halted, but excess supply limits activity. Public finances have weakened due to the rise in prices, interest rates and wages.
Norway's economy is growing, with low unemployment. Wage growth outpaces inflation, improving households' purchasing power. Rate cuts are expected to boost consumption and housing prices. Increasing housing construction, fiscal stimulus and oil sector activity may lead to labour shortages. While inflation is declining, it won't reach 2% soon.
Sweden's domestic demand is poised for recovery, driven by lower interest rates and increased household purchasing power. This will lead to an improved labour market. With the lag in monetary policy effects, we expect the recovery to strengthen in 2025 and 2026. Inflation remains low, and Sweden's Riksbank will likely cut rates further.
Real GDP growth forecast, % year-on-year
|
| 2023 | 2024E | 2025E | 2026E |
|---|---|---|---|---|
| World | 3.2 | 3.2 | 3.3 | 3.2 |
| Denmark | 2.5 | 2.9 | 2.8 | 1.7 |
| Finland | -1.2 | -0.5 | 1.0 | 2.0 |
| Norway (mainland) | 0.6 | 1.0 | 1.8 | 1.8 |
| Sweden | 0.0 | 0.6 | 1.6 | 2.6 |
| Source: Nordea Markets | ||||
For further information:
Helge J. Pedersen, Group Chief Economist, Tel: +45 55471532 | Mob: +45 22697912
E-mail: helge.pedersen@nordea.com
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