Nordic economic recovery on track as consumers ready to ‘splash the money’: Reuters poll

COPENHAGEN, July 9 (Reuters) – Post-pandemic reopenings boost economic recovery in Nordic economies as consumers prepare to splurge using economies that reached record highs during the COVID-19 outbreak, suggested a Reuters poll of economists.

Sweden and Norway are each expected to increase by 3.5% or more in 2021 and 2022, according to the July 5-8 survey, as the gradual return to normal life increases along with the increase in the number of people vaccinated. .

“There are of course still risks associated with COVID-19, but with the progression of vaccinations, we expect the recovery to continue and economies to regain their potential output and pre-crisis unemployment in 2022” Danske Bank said in a note.

Sweden’s gross domestic product is set to grow 3.6% this year and 3.5% next year, above the 3.3% and 3.4% forecast by economists in April, according to the poll .

“Households are optimistic about their own economy, household financial wealth is exploding, the housing market is hot and restrictions are relaxed,” Nordea wrote in a note.

“Coupled with strong global demand, our forecast of 4.5% GDP for fiscal 2021 is still relevant,” he said.

TRACK REOPENINGS BUT STILL VULNERABLE

Norway’s GDP grew by 3.5% this year and next, below previous forecasts for 2021 of 3.7% growth but above the 3.1% previously forecast for next year .

Confidence was further boosted on Wednesday with Norwegian monthly basic GDP estimated at 1.8% in May, beating expectations of a Reuters poll by 0.9%.

“The larger than expected increase in mainland Norway’s GDP in May indicates that the economy is back after the restrictions were lifted, and is likely to have recovered to pre-virus levels in June,” said Capital Economics in a note. .

“We have clearly underestimated the desire of Norwegian consumers to spend money, especially on clothes and shoes, and the 4.9% monthly increase in total spending was the fastest since June 2020”, he added.

The Nordic region has so far dodged the worst economic fallout from the pandemic, and despite big differences in COVID-19 strategies, the path to a full reopening is clear but still fragile.

Earlier this week, Norway announced the easing of some restrictions related to COVID-19 but at the same time delayed the final phase of reopening the economy until the end of this month at the earliest due to concerns concerning the variant of the Delta coronavirus. Read more

Danish growth stood at 3.0% in 2021, in line with April forecasts. Denmark’s GDP growth is expected to accelerate to 3.5% next year, slightly above the previously forecast 3.4%.

Denmark’s central bank said last month that it expects the economy to enter a “moderate boom” this year and the next, supported by strong private demand and high savings accumulated during the pandemic.

“As expected, the Danes were happy to return to previously closed businesses, and while some segments of the service industry are still waiting for a return to full capacity, the signs are also pointing in the right direction here,” Danske Bank said. .

(For other articles from Reuters Global Economic Survey)

Reporting by Stine Jacobsen in Copenhagen, Gwladys Fouché in Oslo and Johan Ahlander in Stockholm Poll by Vivek Mishra in Bengaluru Editing by Matthew Lewis

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