As we navigate through 2024, the Nordic economies continue to demonstrate resilience and adaptability in the face of global economic challenges. In this economic outlook, we provide a comprehensive overview of the economic landscape in Denmark, Norway, Sweden, and Finland, highlighting key trends. In Denmark, employment is increasing, and private consumption is expected to pick up further in the foreseeable future. In Norway, the economy is recovering, and an acceleration of GDP growth is expected in 2025. The same is seen in Sweden, where private consumption also is anticipated to increase significantly. Finally, we note that Finland’s recovery is slow but improving in several ways. When we compare the Nordic economies with other European countries, we note they 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 economy is set to experience a more balanced growth trajectory. While the pharmaceutical sector, particularly Novo Nordisk, has been a significant driver, other sectors are now contributing more robustly. GDP growth is expected to be 1.8-2.4 per cent in 2024, driven by rising employment, real wages, and home prices (Danske Bank, 2024; SEB, 2024). Inflation is currently lower than in other parts of Europe, but it is expected to rise due to wage growth (Danske Bank, 2024).

Consumer spending: Real wages are rising, and employment is growing (Danske Bank, 2024), but consumer confidence is not improving as much (Statistics Denmark, 2024). However, it is expected that these factors will boost private consumption significantly (Danske Bank, 2024; SEB, 2024). The recovery in consumer spending is also supported by lower interest rates and a stable housing market (SEB, 2024).

Labour market: The labour market is strong, and we see that employment is increasing, supported by a strong inflow of foreign workers (Danske Bank, 2024). Unemployment is expected to approach historical lows by the end of 2026 (SEB, 2024). The labour market remains tight.

Political situation: The Danish government is maintaining a stable political environment, with a focus on economic growth and social welfare. The upcoming elections are not expected to bring significant changes to the current policies.

Sweden

Sweden’s economy is poised for a strong recovery, with GDP growth expected to accelerate in 2025 (Danske Bank, 2024; SEB, 2024). As households can expect lower interest rates and income taxes, it will provide a real income boost, positively affecting the economy (Danske Bank, 2024). The Riksbank’s rate cuts are expected to provide significant relief to households, boosting consumer confidence and spending (Ibid.).

Consumer spending: Household consumption is expected to increase significantly, driven by better real wages, expansionary fiscal policy, and lower interest rates in 2025 (Danske Bank, 2024). The recovery in consumer spending is also supported by lower inflation (SEB, 2024). These factors contribute positively to the Swedish population’s purchasing power and are likely to influence household consumption.

Labour market: The labour market has weakened since summer 2023, but employment is expected to climb as economic growth strengthens. Unemployment will gradually fall to 8.0 per cent by the end of 2025 (Danske Bank, 2024; SEB, 2024). Consequently, the labour market remains stable, despite unemployment increasing.

Political situation: The Swedish government is implementing policies to support household purchasing power, as well as structural measures, with the restoration of household purchasing power being important if consumer spending should increase (Danske Bank, 2024). Spending is likely to increase in the foreseeable future.

Norway

Norway’s economic outlook is characterized by a gradual recovery. While growth remains below trend, there are positive signs on the horizon. GDP growth is expected to be 0.7-1.6 per cent in 2024, with an acceleration to 1.9-2.0 per cent in 2025 (Danske Bank, 2024; SEB, 2024). The oil and gas sector continues to play a crucial role, with high investment levels supporting overall economic activity (Danske Bank, 2024; SEB, 2024).

Consumer spending: Consumer spending is expected to recover, driven by improved purchasing power and lower interest rates. The high cost of living is weighing on households, but a strong labour market and higher wages will provide support (SEB, 2024). The recovery in consumer spending is also supported by lower inflation (Danske Bank, 2024).

Labour market: The demand for labour is high, and there is currently no indication of a rapid slowdown in the labour market. Overall, employment has increased, thus there were 16,800 more people employed in Q3 2024 than Q3 2023 (Langdal et al., 2024). Unemployment is expected to rise slightly more than before, peaking in 2025 (Danske Bank, 2024). The labour market remains tight (Danske Bank, 2024; SEB, 2024).

Political situation: The political landscape remains stable, with no significant changes expected in the near future (Danske Bank, 2024). The government’s fiscal policy is expected to persist. Furthermore, the 2025 budget proposal indicates a substantial rise in government expenditures for the upcoming year (SEB, 2024).

Finland

Finland’s economy is emerging from a recession, but the recovery is expected to be slow. GDP growth is projected to be 1.5-1.8 per cent in 2025 and 2026 (Danske Bank, 2024; SEB, 2024). The recovery is likely to pick up in 2025.

Consumer spending: The recovery in consumer spending will continue in late 2024 and 2025, however, unemployment increases may slow it down (Danske Bank, 2024). Inflation continues to be low, and in combination with wage increases, we anticipate consumer spending will be positively affected. Inflation is set to decrease further in 2025, and consumer spending to pick up further (SEB, 2024).

Labour market: Unemployment is expected to rise temporarily before improving in the coming years (Danske Bank, 2024; SEB, 2024). The labour market is expected to grow stronger, positively affecting the economy.

Political situation: The Finnish government is implementing adjustments aimed at addressing the challenges in public finances. The proposed labour market reforms seek to introduce flexibility, although there are concerns regarding their efficacy in addressing Finland’s persistent productivity challenges (SEB, 2024).

Concluding remarks

The Nordic economies are navigating through a period of global uncertainty with remarkable resilience. While each country faces unique challenges, common themes of rising real wages, improving consumer confidence, and a positive outlook for household consumption are driving growth.

References

Danske Bank. (2024). Normalising economies, with risks. http://www.danskebank.com/danskeresearch

Langdal, E., Slaatsveen, I., & Blytt, J. P. (2024, November 21). Norwegian economy incrased more than previously published. Https://Www.Ssb.No/En/Nasjonalregnskap-Og-Konjunkturer/Nasjonalregnskap/Statistikk/Nasjonalregnskap/Artikler/Norwegian-Economy-Increased-More-than-Previously-Published.

SEB. (2024). Sustained growth in an uncertain world.

Statistics Denmark. (2024, November 21). Forbrugertilliden på niveau med oktober. https://www.dst.dk/da/Statistik/nyheder-analyser-publ/nyt/NytHtml?cid=48536

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