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 |
| 77,953 | 68,178 | 121,259 | 62,823 | 57,285 |
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, 2022)
Denmark
Denmark is poised for a gradual return to more broadly based growth in 2024 and 2025, spurred by interest rate cuts and rising private consumption. Despite economic stagnation, employment has continued to rise, boosting household incomes and paving the way for increased private consumption as wages grow. Inflation has sharply fallen to 2.0 per cent, though a slight uptick is expected, and the housing market is anticipated to see modest growth in the coming years.
GDP growth will continue to growth in 2025, and it is set to increase by 2.1-2.7 per cent (Danske Bank, 2024; Økonomiministeriet, 2024).
Private consumption has gained momentum over the winter. Home prices have continued to rise despite high mortgage rates and new tax rules. Growth in private consumption is expected to improve further in 2024 and 2025, shifting the main growth driver from net exports to domestic consumption (SEB, 2024).
Employment is still great and increasing (Statistics Denmark, 2024), contributing to consumption growth (SEB, 2024). Unemployment rose gradually throughout 2023, a trend expected to continue into 2024 and 2025 as the economy experiences a soft landing. So far, unemployment has risen even though employment has also increased due to the quite pronounced growth of the labour force, due mainly to the influx of labour from abroad. Despite rising unemployment, wage growth is accelerating due to recent collective agreements (Danske Bank, 2024).
In January, OECD (2024) published their country report for Denmark, and praised the Danish economy and called it robust.
Sweden
The Swedish economy is driven by strong exports, while domestic demand remains slightly weaker. Despite reduced purchasing power, consumption has been stable thanks to strong employment. Inflation has decreased significantly to 2.3-2.5 per cent, with further declines expected in 2025 (Danske Bank, 2024; Statistics Sweden, 2024).
GDP growth: 0.5-1.5 per cent depending on sources (Danske Bank, 2024; SEB, 2024). Growth will accelerate in 2025.
Now that inflation is decelerating, the volume of consumption has rebounded, gaining 0.7 per cent during the fourth quarter of 2023. Because of slowing inflation, real household incomes have begun to rise again. With expected interest rate cuts, this has led to a significant upturn in confidence among households and retailers (SEB, 2024).
Unemployment continues to rise, but we argue that this is not a fair reflection of the current state of the Swedish labour market. While the rate of unemployment is rising, Statistics Sweden’s measure of the number of jobless seems to have peaked and has edged down over the past two months (Danske Bank, 2024). We expect unemployment to continue rising over the next six months, but when growth picks up in 2025, it will fall back to about today’s levels (SEB, 2024).
Norway
Negative real wage growth and higher mortgage rates are headwinds for private consumption and residential investment. Investments have stalled due to lower capacity utilization, increased uncertainty, profitability pressures, and higher financing costs. Inflation is slowing, with current rates near 5 per cent but expected to decrease to around 4.5 per cent (Danske Bank, 2024).
GDP Growth: 1.1-1.7 per cent (Danske Bank, 2024; SEB, 2024).
Private consumption has declined markedly, especially goods consumption, but the downturn is still milder than expected given the high interest rate sensitivity of the Norwegian economy. In real terms, service consumption has risen roughly in line with its historical trend, despite high costs. The strong labour market has probably contributed to resilience, and dwindling household savings buffers suggest that consumption is partly fuelled by savings (SEB, 2024).
Unemployment rising moderately, and employment seems to be softening. Employment also rose in the fourth quarter 2023, pulling in the same direction. When employment is rising and vacancies are falling without unemployment coming down, this may be a sign that the labour market is functioning better with fewer bottlenecks. It is still anticipated that unemployment will rise to 2.3 per cent this year (Danske Bank, 2024). The unemployment rate has remained almost unchanged for some time (SEB, 2024).
Finland
Finland enters 2024 in a recession, with rising interest rates holding back economic growth. Export orders remain sluggish in the short term, but economic growth is expected to pick up later in 2024, driven by private consumption supported by falling inflation, lower interest rates, and renewed export demand. Unemployment will increase slightly, but falling interest rates should stimulate the economy (Danske Bank, 2024).
GDP growth: -0.2-0.4 per cent (Danske Bank, 2024; SEB, 2024).
Falling inflation and interest rates will increase the purchasing power of consumers, but the economic uncertainty is still stalling purchase decisions. We expect the unleashing of pent-up demand will increase demand in both consumer durables and the housing markets. We expect an upward turn in private consumption in 2024, but the gradual increase in unemployment will keep demand moderate towards the summer (Danske Bank). Rapid income growth has underpinned private consumption, which emerged as the strongest component of the economy in 2023. Household consumption is projected to maintain its momentum, outpacing exports and investments once again in 2024 with an increase of 0.7 per cent (SEB, 2024).
Labour markets will remain fairly steady even though some sectors will reduce workforce. Many companies are still struggling with labour shortages and wages are rising faster than in recent years. In terms of employment, the recession was milder than usual, as the number of people in employment remained fairly stable (Danske Bank, 2024). Higher unemployment, but not for long. Despite some lay-offs in the manufacturing sector, the labour market remains robust. Unemployment stood at 7.7 per cent in February 2024, one percentage point higher than a year earlier but still relatively low compared to its historical average (SEB, 2024)..
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References
Danske Bank. (2024). Nordic Outlook: Return to Nordic growth. http://www.danskebank.com/danskeresearch
OECD. (2024). OECD Economic Surveys: Denmark 2024. https://doi.org/10.1787/d5c6f307-en
Økonomiministeriet. (2024, May 16). Økonomisk Redegørelse: Optimismen er på vej tilbage i dansk økonomi. https://www.regeringen.dk/nyheder/2024/%C3%B8konomisk-redegoerelse-optimismen-er-paa-vej-tilbage-i-dansk-oekonomi/
SEB. (2024). Nordic Outlook: May 2024.
Statistics Denmark. (2024). Unemployed persons (register). https://www.dst.dk/en/Statistik/emner/arbejde-og-indkomst/arbejdsloese/arbejdsloese-register
Statistics Sweden. (2024). Consumer Price Index (CPI). https://www.scb.se/en/PR0101-en
World Bank. (2022). GDP pr. capita, PPP, International Comparison Program. World Bank. https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?most_recent_value_desc=true
