The global economy has seen some reduction in downside risks since the spring, attributed to trade agreements reached by President Trump and a fiscal agreement in the United States. Despite these developments, growth momentum remains weak in many countries, with economies relying on fiscal easing as both consumers and businesses remain cautious. Most central banks have finished their cycles of interest rate cuts and are expected to maintain current rates for the foreseeable future.
Nordic economies continue to demonstrate resilience despite global challenges. With the exception of Finland, these countries retain AAA credit ratings, supported by strong public finances and solid external surpluses. Helge Pedersen, Nordea Group Chief Economist, stated: “Despite downward adjustments to 2025 growth forecasts for Denmark, Finland and Sweden due to various factors, the outlook remains cautiously optimistic.”
In Denmark, Nordea has revised its economic growth expectations downward. This adjustment is partly due to changes in historical growth figures and a decline in industrial production—including pharmaceuticals. Still, the Danish economy is described as robust with low unemployment rates, a significant public budget surplus, and low levels of public debt.
Finland’s economic recovery has been slower than anticipated this year even though fundamentals have improved. Lower interest rates and reduced inflation are increasing purchasing power; however, weak confidence continues to limit consumption and investment. While manufacturing is showing signs of improvement, construction activity remains subdued.
Norway’s economy stands out with strong growth prospects despite ongoing global uncertainties. Increased household purchasing power supports this positive trend. Growth is expected to stay at or above its long-term trend level while unemployment remains low. High wage increases and inflation above the 2% target leave little room for additional rate cuts.
Sweden faces slower economic growth because of international turbulence but shows early signs of recovery. Rising household confidence is expected to lead to increased spending. The export sector benefits from more stable global trade arrangements now in place. As economic conditions improve further, there will be less need for monetary policy easing.
Helge Pedersen added: “With the exception of Finland, the countries belong to the exclusive group of AAA-rated nations, characterised by robust public finances and solid external balance sheet surpluses.”
For more details on regional GDP forecasts and analysis from Nordea Bank’s economists visit their Economic Outlook page.
