Is there money in Nordic pockets for this winter season that begins this weekend in the south of Gran Canaria? The answer is yes, but it's not that big of a deal. Sweden's economy will be the worst performing in the Nordic region this year and next. Gross domestic product in Sweden is expected to shrink by around 0,7% in 2023 and grow just 0,2% next year, the Oct. 12-18 survey of 23 analysts showed. Norway's core inflation is forecast to be 5,7% this year before slowing to 3,2% in 2024.
Rising inflation, rising interest rates and falling global demand have hit economies across Europe, but Sweden is particularly sensitive as many households have floating-rate mortgages and are highly indebted. Higher interest rates have raised payments and forced households to cut spending. Housing starts have plummeted and the National Housing, Construction and Planning Board expects a 55% drop this year and a further drop in 2024.
Sweden is in a recession but it is not in a crisis. It could be a crisis for households or businesses, but overall the Swedish economy remains strong. The economy has begun to slow after eight consecutive rate hikes and the central bank could well add to the pain in November. He worries that inflation has not fallen fast enough toward the 2% target.
Norway's mainland economy is expected to grow 1,3% this year and 0,8% next year. It is held back by the oil sector, while the construction industry is completely dead and seems slow. Norway's central bank raised its policy rate last month to 4,25% and has said it plans to raise it again in December, although the likelihood of that happening has diminished since inflation fell more than expected in September. .
Consumption will likely be limited in the coming months, but a year from now, as households will have more disposable income thanks to higher wages and unchanged interest expenses, it may get a boost. Denmark's economy has enjoyed strong growth in recent years, mainly thanks to the pharmaceutical industry. But parts of the economy are slowing due to tighter credit conditions and lower investment, particularly in housing.
Analysts expected Denmark's economy to grow 1,4% this year and 1,3% in 2024. Inflation is expected to slow further to 2,5% next year from an average of 3,8% in 2023. The economy grew 2,7% last year.
