Strength of Nordic activity surveys won’t last

Economic growth in Switzerland, Sweden and Norway looks set to slow next year. In fact, survey evidence in Switzerland suggests that the economy has already shifted down a gear, with the KOF Economic Barometer pointing to a decline in annual GDP growth from over 3% in Q2 to about 1.5%. What’s more, this year’s boost from the Olympics and World Cup (which increased the revenues of Swiss-based organisations) will not be repeated, and will therefore act as a drag on growth in 2019. In Sweden, while survey measures of activity remain fairly strong for now, tighter monetary policy and a cooling housing market are likely to weigh on the economy next year. Business surveys also paint a positive picture in Norway, suggesting that Q3’s slowdown was just a blip. But Norway’s central bank is likely to raise interest rates next year too. And we think that falling oil prices will hit the economy, causing growth to slow more sharply than policymakers expect.