Nordic Outlook, August 2012

During the next couple of years, growth in the 34 countries that form the OECD will be lacklustre, but the risks of a deep recession have diminished, SEB’s economists write in the latest issue of Nordic Outlook.

It is unconventional monetary policy by the world’s central banks that will ease the impact of ongoing debt deleveraging and create political manoeuvring room for fiscal consolidation and restructuring policies. A corporate sector with strong balance sheets is also being stimulated into increasing its capital spending.

Overall, Gross Domestic Product (GDP) in the OECD will grow by 1.4 per cent in 2012, 1.7 per cent in 2013 and 2.1 per cent in 2014. OECD inflation will remain stable at a low 1-2 per cent. Emerging economies are entering a calmer expansion phase, but a surprisingly rapid downturn in inflation will allow these countries room for official economic stimulus measures which will help growth to slowly rebound.

“In the euro zone, the recession is settling in this autumn and GDP will grow by a weak 0.2 per cent in 2013. In 2014 we expect GDP growth to accelerate to 0.9 per cent as the impact of austerity policies in southern Europe softens,” Håkan Frisén, head of Economic Research at SEB and editor of Nordic Outlook, says.

The Nordic countries as a whole will also continue to show resilience. The Norwegian economy will follow its own path, helped by strong private consumption. Unemployment there will be stable at a low 3 per cent and home prices are continuing to rise.

The export-driven economic slowdown in the three Baltic countries is being softened by continued decent domestic demand. GDP growth − which has fallen sharply during the past year, especially in Estonia − will gradually recover in 2013.

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