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Thu, 05 Jun, 2014 12:08:31 AM
Nordic economies growth pace expected to rise in 2015: Nordea
FTimes-Xinhua Report, June 5

The latest economic outlook released by Nordea Bank on Wednesday showed that Finland is hit by a risk of a protracted economic recession.

     In the report, Nordea said that Finland is found "very difficult to shake off the financial crisis," while the other three Nordic countries Sweden, Norway and Denmark are expected to grow by 1.3 to 2.7 percent respectively in 2014.

     Nordea forecasted the third consecutive year of negative or stagnant growth for the Finnish economy. The bank therefore downgraded Finland's economic forecast in 2014 from 0.3 percent to -0.5 percent.

     In addition to the steep decline in economic activities in recent years, the bleak economic outlook could also be attributed to the downturn in the Russian economy and its severe impact on exports and cross-border trading with Finland, Nordea explained.

     Finland has experienced two and half years of negative economic growth. With the gloomy outlook, Nordea estimated that Finland's current AAA credit rating might be under threat.

     The bank urged Finland to carry out the structure reforms effectively and cut public spending further to stabilize the public finance.

     However, in step with the global economic recovery, the Finnish economy will show signs of recovery next year. Nordea Bank predicted that the Finnish economy is expected to grow by 1.0 percent in 2015. 

Meanwhile, the Nordic economies combined are expected to rise from 1.6 percent this year to 1.9 percent in 2015, said Swedish bank Nordea in a statement on Wednesday.

    "This is well ahead of the Euro-zone economy, which will expand by 1.2 percent in 2014 and 1.5 percent in 2015," Helge Pedersen, Nordea's Global Chief Economist was quoted as saying in the statement.

    "Combined with solid public finances and strong external positions this illustrates that the Scandinavian countries are ready to step in as safe havens in the financial markets whenever it might be needed," Pedersen added.

    Meanwhile, new economic forecasts from Nordea show that Norway and Sweden are well under way, while Denmark is only slowly ascending from the bottom.

    In Sweden, strongly accelerating domestic demand is reported to be one of the main growth drivers this year. Unemployment is still relatively high and inflation far below the Swedish central bank Riksbank's target.  

    The Norwegian economy has so far this year been stronger than initially assumed, but a slight slowdown is still expected during the forecast horizon notably as a consequence of a decline in overall investment activity, said the statement of Nordea.

    In Denmark, the government has continued its reform-and growth-oriented economic policy line. And the housing market finally shows signs of moderate improvement, although there are still considerable regional differences.

    However, Finland is hit by a renewed risk of ending up in a protracted economic recession. One of the chief reasons is the slowdown in the Russian economy and its severe impact on exports and cross-border shopping.

    Nordea has around 11 million customers, approximately 1,400 branch offices and is among the ten largest universal banks in Europe in terms of total market capitalization.

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