The latest indicators have added to the evidence that economic growth in much of Scandinavia slowed at the start of 2019. Indeed, after strong finishes to 2018, surveys suggest that GDP in Sweden, Denmark, and Finland will have done well to grow at all in Q1. Norway remains the exception, with comparatively strong growth and above-target inflation keeping the Norges Bank in tightening mode for now. Outside of the Nordics, the Swiss economy appears to have continued to expand, albeit at a fairly modest pace. The sharp fall in Switzerland’s manufacturing PMI in March shows that the woes in the euro-zone industrial sector have spread across the border. Looking ahead, if our forecast for growth in the euro-zone to stay weak proves accurate, activity in Switzerland and the Nordics will continue to face headwinds over the coming years. Against this backdrop, with the exception of Norway, it is increasingly likely that the next moves in interest rates will be down.
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