GDP growth of most Nordic and Baltic countries is expected to outpace the OECD average of 1-2%, although individual markets in the region are struggling with weakened economies and changing regulations, according to SEB in its latest Outlook on the Nordics.
In Sweden, growth will reach only 1.4% in 2012 and then climb somewhat to 2.6% in 2013, according to SEB. Unlike the euro, the krona remains stable and has potential to increase to 8.70 krona per euro, meaning the krona is undervalued.
Growth is suspected to be slow in Denmark for the time beingSEB says it will see a gradual increase with GDP growth of 1.7% next year and 2.3% in 2013.
SEB predicts a drop in unemployment in Finland that will boost GDP growth around 2.5% annually in both 2012 and 2013.
Norway has the best growth potential of the Nordic countries, according to SEB. With its solid public finances, oil income, capital spending and labor market, the group expects to see GDP growth around 2.5% next year as well as in 2013.
SEB expects to see continued gradual recovery over the next two years for Baltic countries after all three saw strong growth in the first half of the year. According to SEB, GDP growth will be between 4% and 5% in 2012 and 2013 in Estonia, Latvia and Lithuania.
Meanwhile, across the globe, the risk of recession is at 30% and unemployment (especially among young people) is predicted to get stuck at high levels in many countries. But on the bright side, China and other parts of Asia are expected to see annual growth close to trend (6-8%), even while being affected by the weakening of the US and European economies, SEB says.
The bank says the future of the euro looks grim as officials will have to decide between increasing supranational authority or scrapping the currency altogether. Central banks are facing the pressure of maintaining historically low interest rates, but SEB expects both the US Federal Reserve (Fed) and the European Central Bank (ECB) to uphold key interest rates for the remainder of the year and into 2012.
(CM)