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Nordic Countries

Material is scarce and frustration is building. Some operators are already dismissing 2024 as a lost year that is all about survival whereas others are more relaxed and describe inflows as back to pre-pandemic levels. Some yards are really struggling with low inflows of material and are desperately looking to expand their supply networks.

With more buyers entering the market, including from other countries in Europe, the result is significant levels of competition and high demand for material. In the end, however, it is not that easy to sell the material at the final step and high prices are not aligned with actual demand. Given the scarcity of material and the high prices (with the exchange rate also a huge factor in Sweden), it could be called a seller’s market. In a way, however, it seems more like a gambler’s market, with everyone hoping they have a winning hand without really knowing what that hand consists of as they consider the best time to sell and/or buy material.

After two years of stagnation in Sweden, the pieces are finally beginning to align with regard to the economy, although the immediate future remains constrained by lower exports and sluggish investments. Nonetheless, positive signs are emerging as the financial health of both companies and households sees an improvement attributed to the normalization of inflation and a reduction of the key interest rate by the Riksbank. Furthermore, the labour market is projected to reach its lowest point this autumn and, when combined with an expansive fiscal policy, this is expected to pave the way for a more pronounced recovery in the coming year. Key points to note include a gradual recovery trajectory, a temporary rise in unemployment in the near future, persistently low inflation rates, and the crucial role of interest rate cuts in facilitating the recovery process. Although facing headwinds in the immediate term, the krona is expected to strengthen in the long run.

The Danish economy is continuing its expansion, propelled by growth in the pharmaceuticals sector, although there are diverging trends in the housing market. Denmark’s central bank is expected to reduce rates in June.

Over recent years, the country has experienced robust economic growth, largely driven by a pharmaceuticals sector which has bolstered industrial production and exports. Employment continues to be on the rise, with unemployment remaining exceptionally low. Looking ahead, the Danish economy is expected to maintain its growth trajectory, especially as households benefit from notable real wage increases. But challenges persist, notably high interest rates causing a significant slowdown in construction. Additionally, the real estate market faces pressures, with an increasing number of homes for sale. Inflation rates in Denmark trail those of the broader Eurozone.

The Finnish economy has faced challenges, although inflation concerns are abating and purchasing power is slowly on the rise. The labour market remains stable while the housing sector is struggling. Service exports have declined and adjustments are being made to public finances. High interest rates have pushed the Finnish economy into a recession, prompting adjustments in spending by mortgage holders and the public sector. This has dampened demand but is expected to result in more balanced finances. Looking ahead, as purchasing power strengthens and global demand increases, the economy is projected to resume its growth next year.

Economic activity in Norway is poised for an upturn, with unemployment expected to remain low. While a gradual decline is anticipated for inflation, reaching the 2% target will take several years. Factors such as persistently high inflation, a weakened Norwegian krone, robust wage growth and brighter economic prospects will delay Norges Bank’s planned rate cuts until next year. Recent wage agreements in leading sectors have resulted in a significant 5.2% increase, enhancing household purchasing power and driving up house prices despite the absence of rate reductions.

Geopolitical challenges and slower rate cuts internationally continue to impact the Norwegian krone. Moving forward, Norway anticipates higher economic activity, improved household conditions, a gradual decline in interest rates, rising housing prices and ongoing krone weakness.