The Nordic countries have so far not been hit hard by the conflict in the Middle East. None of the countries has significant trade with the region, and the economies are among the most energy-efficient in the world, with a significant share of consumption in all countries coming from renewable energy sources. This gives the Nordic countries a competitive advantage in times of rising oil prices, says Helge Pedersen, Nordea Group Chief Economist.

The Danish economy stands on a solid foundation with strong public finances and high employment. Geopolitical turmoil will likely lead to lower economic growth and higher inflation than previously expected, although both remain at relatively favourable levels. Consumption is expected to drive activity forward.

The Finnish economy has returned to broad-based growth, with both private consumption and industrial output picking up. This growth is beginning to support the labour market and public finances. However, higher energy prices and rising interest rates in the wake of the Middle East crisis will likely dampen economic activity later in the year.

Norway's economy shows resilience to the Middle East conflict, although higher interest rates weigh on the outlook. Persistent above-target inflation, fuelled by higher oil and commodity prices, will likely prompt further tightening from Norges Bank. Unemployment remains low, and the krone continues to strengthen.

Sweden is well-positioned to withstand challenges from the Middle East war, with conditions in place for healthy growth. Rising international demand will support exports while the labour market continues to improve. Low inflationary pressure at the outset gives the Riksbank room to wait and see this year.

Read Economic Outlook here.
 

For further information

Helge J. Pedersen, Group Chief Economist, Mob: +45 22697912
E-mail: helge.pedersen@nordea.com

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