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Nordic Countries

While some yards are complaining of less incoming material, others are talking of a return to normal and see this slower inflow as a positive in that it provides time to take care and process the material. Uncertainty continues to surround future inflows, prompting everyone to ask the following questions: Is this a new normal? Or is it a new low? Or worse, can it go even lower?

The cheap Swedish krona has had a positive effect on prices but, given that the Riksbank is now trying to strengthen it, currency risk also becomes a factor.

While the current economic situation in the Nordic countries might appear stable, significant risks loom on the horizon. While each country faces unique challenges, common themes include inflationary pressures, interest rate hikes and concerns about various economic sectors.

Denmark’s economy boasts low unemployment rates, a solid GDP growth trajectory and positive prospects for private consumption. However, certain concerns persist: growth is driven primarily by pharmaceutical giants like Novo Nordisk, while other industrial sectors are witnessing production declines; also, employment growth relies heavily on pharmaceuticals, posing a risk if the broader economy stagnates; and the construction sector faces challenges, with a notable rise in bankruptcies primarily attributed to delayed pandemic effects. While inflation has decreased, this is mainly down to lower energy costs whereas other prices continue to rise steadily.

In Sweden, households and the housing market remain challenging whereas the business sector and labour markets are performing well. A downward adjustment has been made to the growth forecast, although a severe recession seems less likely. The low krona exchange rate keeps causing headaches for the Riksbank. Unfortunately at this time, the Swedish Debt Office is continuing its phase-out of central government debt’s currency exposure, selling Swedish krona. These conflicting actions relating to the krona raise questions about co-ordination.

Norway’s growth has decelerated as households are adapting to tougher economic conditions by saving more and reducing consumption while Norwegian house prices are expected to continue their decline. The country is contending with high inflation as well as wage growth, which contribute to inflationary pressures. Unemployment is slowly increasing, albeit from low levels. Norges Bank is expected to proceed with its plan of raising the policy rate, with the next hike likely to be the last in the current cycle.

Finland anticipates economic stagnation in late 2023, with rising interest rates hampering both consumer spending and business investment. Labour markets remain relatively stable despite workforce reductions in certain sectors. The expectation is for a rebound in 2024, driven by increased private consumption, falling inflation and a revival in export demand.