Global economic growth is maintaining a moderate pace, with the United States experiencing a boost following the presidential election. In contrast, Europe is lagging behind. According to Helge Pedersen, Nordea Group Chief Economist, "Economic uncertainty is high, increasingly driven by political developments." He also noted that central banks' monetary policy interest rate cuts are nearing their end.
In the Nordic region, export conditions remain uncertain, emphasizing the significance of domestic demand for future growth. It is anticipated that private consumption will rebound strongly across the Nordics due to favorable job prospects, falling interest rates, and rising disposable income.
Denmark's economy is currently strong with controlled inflation, record employment levels, and robust public finances. However, challenges such as low consumer confidence and weak residential construction persist alongside uncertain export prospects. Despite these issues, solid growth in 2025 is expected due to rate cuts and increased purchasing power.
Finland's economy shows modest growth but remains in a weak economic cycle. Consumers continue to be cautious despite improving purchasing power and declining interest rates. The housing sector contraction has halted; however, excess supply limits activity. Public finances have weakened owing to rising prices, interest rates, and wages.
Norway's economy is growing with low unemployment rates. Wage growth surpasses inflation levels which improves household purchasing power. Rate cuts are projected to boost consumption and housing prices further. Increased housing construction along with fiscal stimulus and oil sector activity may result in labor shortages. Inflation continues to decline but won't reach 2% soon.
Sweden's domestic demand appears ready for recovery driven by lower interest rates and increased household purchasing power leading to an improved labor market situation. With delayed effects from monetary policy changes expectedly strengthening recovery throughout 2025-2026 period while inflation remains low prompting Riksbank likely cutting rates further.