Various indicators across the Nordic region reveal that inflation is declining, and overall, the economies have demonstrated resilience. In Sweden, growth has resumed, marked by rising employment rates and increased household spending. While Norway’s economic activity has decelerated, the GDP is still projected to grow in 2024. Denmark’s economy continues to improve, driven largely by consumption and high employment rates. Finland is gradually emerging from a recession, with expectations of improvement in 2024. Despite these differences, compared to other European countries, the Nordic economies are performing well.
When investigating the Nordic economies and comparing them to other countries in Europe, it becomes clear that the Nordics are in a good position. The GDP per capita (PPP) is well above average in the EU, as seen in the table below:
| Denmark | Sweden | Norway | Finland | EU Average |
| 76,687 | 70,206 | 104,459 | 65,060 | 60,348 |
Table 1: GDP per capita, PPP (current international $) (International Comparison Program, World Bank | World Development Indicators database, World Bank | Eurostat-OECD PPP Programme) (World Bank, 2023)
Denmark
Denmark’s GDP figures remain positive, the economy will recover even more, driven by more than just the pharmaceutical industry, inflation has fallen significantly, and unemployment remains low (Danske Bank, 2024; SEB, 2024a). With a 2 per cent GDP growth forecast for 2024 and further acceleration in 2025, it is clear that the Danish economy is strong compared to other European nations (Danske Bank, 2024; SEB, 2024a). As a result, the Danish economy is not expected to experience any recession.
Consumer spending has been modest, according to Danske Bank (2024), however, due to increasing real wages combined with anticipated lower interest rates, private consumption is expected to increase, driving the growth further (Danske Bank, 2024; SEB, 2024a) and positively affecting many industries, including the travel and tourism industry.As incomes rise and consumer confidence recovers, consumption is likely to pick up even further.
The Danish workforce continues to have high employment levels, with only 2.9 per cent of workers unemployed (Statistics Denmark, 2024), a trend consistent throughout 2023 and 2024. Although there was a slight uptick in unemployment in 2023, the rate remains remarkably low. This positively impacts the economy, and it is expected that these low unemployment rates will contribute significantly to consumer spending.
In January, OECD (2024) published their country report for Denmark, and praised the Danish economy and called it robust.
Sweden
While the Swedish economy has been under pressure, it is finally experiencing growth, partly due to a more potent GDP growth as well as the slowdown of the inflation rate (Danske Bank, 2024; SEB, 2024a). Inflation is now approaching a more normal level (Statistics Sweden, 2024), which will positively affect the economy. Furthermore, with the GDP growth seen so far in 2024, the anticipated GDP growth in 2025 is set to increase further to 2.6 per cent (SEB, 2024a).
Swedish households remain resilient, and private consumption is steady but has yet to surge. This should improve with ongoing interest rate cuts and increasing real wages (Danske Bank, 2024; SEB, 2024a). Consumer confidence has recovered since early 2023 (Danske Bank, 2023b), and continues to do so in 2024 (Danske Bank, 2024). As such, it is expected that private consumption will increase further and take off in 2025 (SEB, 2024a).
The labour market in Sweden is slowing, and unemployment is expected to increase in the next 6-9 months, according to SEB (2024a), despite being strong in 2023 (SEB, 2024b). However, reports remain optimistic and the rise in unemployment is not anticipated to influence private consumption negatively in 2024 (Danske Bank, 2024; SEB, 2024a). Moreover, the prospects for a significant economic upturn in 2025 and 2026 appear promising.
Norway
The Norwegian economy is benefiting from rising GDP growth, quicker-than-expected declines in inflation, and anticipated reductions in interest rates. As we approach 2025, GDP growth is projected to increase at an even faster rate, highlighting that the Norwegian economy exceeded expectations in 2024 (Danske Bank, 2024; SEB, 2024a). Private consumption is expected to recover further (SEB, 2024a).
Consumer spending is anticipated to stay modest in 2024. Private consumption is projected to increase marginally in the latter half of the year, though lower inflation and rising wages are likely to bolster private consumption during this period (Danske Bank, 2024; SEB, 2024a). Falling interest rates and increasing wages will boost private consumption in 2025 and 2026. Although consumer spending in 2024 is modest, it remains higher than in other European countries.
While unemployment rates continue to be low, there has been a slight increase in recent months, suggesting a cooldown of the Norwegian labour market (SEB, 2024a). Danske Bank (2023a) expects that the unemployment rate will rise in 2024. Although there has been a slight uptick in the unemployment rate, we expect this will have minimal impact on private consumption (Danske Bank, 2023a). SEB (2024a) expects unemployment will peak in 2025 before falling again as the economy improves even further.
Finland
Despite Finland’s early-year recovery from a technical recession, the labour market and low confidence indicators point to ongoing economic sluggishness in the second quarter (Danske Bank, 2024). GDP is expected to decline in 2024 by 0.4-0.6 per cent, before picking up and increasing once again in 2025 and 2026 (Danske Bank, 2024; SEB, 2024a). Inflation has continued to fall, positively affecting the economy and private consumption, and should be seen as a sign of further recovery (SEB, 2024a).
The gradual recovery in consumer spending is set to continue in 2024, however, the fear of unemployment will mean a modest demand (Danske Bank, 2024). But combined with growth in wages, it should positively impact private consumption (SEB, 2024a). Private consumption is expected to increase further in 2025.
The unemployment rate kept rising in 2023 and is expected to hit the levels that followed the pandemic (SEB, 2024b). This picture is also seen in 2024, and it can worry consumers (Danske Bank, 2024). The unemployment rate is expected to decline in 2025 (OECD, 2023; SEB, 2024b; SEB Group, 2023), as many companies struggle with labour shortages (SEB, 2024a).
References
Danske Bank. (2023a). Coming in for a soft landing Nordic Outlook. http://www.danskebank.com/danskeresearch
Danske Bank. (2023b). Nordic Outlook: Divergent fortunes. http://www.danskebank.com/danskeresearch
Danske Bank. (2024). Nordic Outlook: Warmer than expected. http://www.danskebank.com/danskeresearch
OECD. (2024). OECD Economic Surveys: Denmark 2024. https://doi.org/10.1787/d5c6f307-en
SEB. (2024a). Nordic Outlook: August 2024.
SEB. (2024b). Nordic Outlook: January 2024. In 2024.
Statistics Sweden. (2024). Inflation rate according to CPI. https://www.scb.se/en/finding-statistics/statistics-by-subject-area/prices-and-consumption/consumer-price-index/consumer-price-index-cpi/pong/tables-and-graphs/consumer-price-index-cpi/inflation-rate-according-to-cpi/
World Bank. (2023). GDP pr. capita, PPP, International Comparison Program. World Bank. https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?most_recent_value_desc=true
