Nordics: Domestic-driven growth in the face of external uncertainty

We expect Nordic GDP growth to outperform the Eurozone in 2026, driven by expansionary fiscal policy and higher consumer spending. Finland is an exception as the government will continue to consolidate public finances next year.

What you will learn:

• We expect domestic demand to be the key growth support as external demand looks set to be weak. Higher employment, robust real income growth, and favourable tax changes will support private consumption. Meanwhile, previous central bank rate cuts should offset some of the investment hit from higher trade policy uncertainty, although much of the initial boost has already materialised.
• Finland’s fiscal tightening could exacerbate its growth differential with the region. For Sweden and Denmark, planned tax measures will be important in supporting private consumption, while fiscal policy will also remain expansionary in Norway.
• Growth risks appear balanced. Household savings rates are unlikely to settle back fully to pre-pandemic norms. But investment may withstand higher trade policy uncertainty better than we expect, particularly now that the US and EU have agreed a trade deal.