Scandinavian economies are showing increasing signs of economic growth in the next two to three years, as the receding recession in the Euro Zone and the gradual diversification of export markets are having a positive impact on the Gross Domestic Product (GDP) outlook for Denmark, Finland, Norway and Sweden.
The Scandinavian countries, according to the latest Nordic Economic Outlook report released by SEB bank, are taking different paths, depending on their exchange rate systems and the structure of their housing and labour markets, which to some extent puts into question whether any shared Nordic model exists.
In Denmark, the housing market now seems to be moving towards recovery, which will lay the groundwork for consumer-driven growth. SEB expects GDP growth to be above the trend and reach two per cent in 2014 and 2.5 per cent in 2015.
In Finland, says SEB, the economy continues to be squeezed by deteriorating competitiveness, unfavourable price trends for import and export of goods and structural difficulties in the information and communications technology (ICT) sector. A weaker euro will provide some support to the Finnish economy and GDP growth will be 0.8 per cent in 2014 and 1.4 per cent in 2015.
In Norway, SEB points out the extensive focus on the housing market. Home prices in Norway run the biggest risk of decline among Nordic countries, SEB forecasts that this decline will be moderate. Because of lower activity in the oil sector, GDP growth will reach 2.1 per cent in 2014 and 1.8 per cent in 2015.
The Swedish economic activity will accelerate with the help of stronger private consumption, a brighter outlook for the export sector and increased construction of houses. SEB forecasts Swedish GDP growth of 2.5 per cent in 2014, rising to 3.2 per cent in 2015.
Unemployment in Sweden will decline from 8.2 per cent in 2013 to 7.6 per cent in 2014 and 6.8 per cent by the end of 2015. Inflation will remain low at 1.5 per cent at the end of 2015, well below the Swedish Central Bank (Riksbank’s) two per cent inflation target. According to SEB, the risks to the Swedish economy are mainly connected to the housing market.