Nordic Economies Economic Outlook February 2017

Economic Snapshot for the Nordic Economies

Nordic Economies: Economic Snapshot for the Nordic Economies

February 1, 2017

DenmarkThe economy is expected to accelerate this year on the back of solid domestic and stronger external demand. Private consumption should benefit from improved employment conditions with higher wages and more job vacancies as the labor market is expected to tighten. In addition, the increase in petroleum prices will buttress income from Denmark’s offshore oil fields. Panelists expect GDP to expand 1.5% in 2017, which is unchanged from last month’s estimate. In 2018, FocusEconomics panelists see growth at 1.7%.

FinlandFinland’s economy will likely decelerate this year, as a faster pace of export growth will be more than offset by weakening private consumption and investment. The implementation of the Competitiveness Pact, which includes tax concessions and wage freezes, will contribute to the country’s export competitiveness but will diminish households’ purchasing power. Still-lingering structural problems in Finland’s labor market and uncertainty overseas will also add downward pressure on economic growth. FocusEconomics panelists expect GDP to grow 1.1% in 2017, which is unchanged from last month’s estimate. In 2018, analysts expect GDP to expand 1.3%.

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NorwayHigher prices for crude oil bode well for Norwegian exports, which are seen rebounding this year. GDP is expected to expand 1.3% in 2017, which is down 0.1 percentage points from last month’s forecast. For 2018, our panel sees the economy growing 1.7%. Mainland GDP, which excludes oil drilling activities, is expected to expand 1.6% in 2017, which is down 0.1 percentage points from last month’s estimate. The panel expects Mainland GDP to increase 2.0% in 2018.

SwedenSweden's economy is expected to remain in good shape this year and next. A pickup in export growth and a consolidation of the labor market, coupled with growth in disposable income, should support private consumption. However, possible spillovers from Brexit and uncertainty stemming from growing protectionist policies could hinder the small and highly open economy. FocusEconomics panelists see GDP rising 2.3% in 2017, which is unchanged from last month’s forecast. For 2018, they see the economy decelerating marginally to 2.2%. 

IcelandIceland should grow at a slower—but still very robust—pace in 2017, as a strengthening currency starts to weigh on the economy’s traditional export industries. Our panelists see GDP expanding 4.0% in 2017 and 2.9% in 2018.

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