Underlying Swedish inflation is set to pick up further and means that the Riksbank’s ultra-loose policy is no longer justified. Conversely, the outlook for Norwegian inflation calls for an interest rate cut. Economic surveys for the largest two Nordic economies have improved in the last six months. In Sweden, the NIER’s Economic Tendency Indicator points to annual GDP growth accelerating from Q4’s 2.3% to as high as 6.0%. In Norway, firms’ output expectations are consistent with a pick-up in annual mainland GDP growth from Q4’s 1.2% to a little over 2.0%. While growth in both countries seems set to pick up, it will be from vastly different starting points. As growth in Norway has slowed in recent years, the economy is probably operating below its potential. In contrast, the Swedish economy is probably operating above its potential.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services