Nordics Key Themes 2025: Policy and cyclical tailwinds will boost growth

The Nordic economies have experienced two years of subdued growth, with weak domestic demand offset by net exports. We expect growth to increase in the Nordics in 2025. A cyclical upswing due to low inflation, high wage growth, improved confidence and supportive fiscal and monetary policies will fuel a demand-led turnaround.

In this report, we delve into four key questions shaping the economic outlook for the Nordic economies in 2025:

• What will drive growth across the Nordic economies in 2025? We expect growth will pick up in 2025 in Sweden, Norway and Finland, with Denmark as the exception, where we believe growth will slow but remain above potential.
• How will fiscal and monetary policies evolve? Following a period of high interest rates amid the post-pandemic sky-high inflation episode, we believe the Nordics will continue to undergo significant monetary policy easing. In the meantime, Nordic governments are planning sizeable fiscal loosening in 2025.
• Will inflation remain below the 2% target? The high inflation episode in the Nordics is over. Wage growth is set to moderate next year, so services inflation should continue to ease. This will help keep headline inflation below 2% even as favourable base effects in goods prices fade. However, underlying cost pressures have not fully abated.
• What is the outlook for the labour market? We think the worst of the labour market weakening is behind us, with unemployment rates gradually declining throughout the year. Recovering demand will increase labour demand, albeit with a lag.

Download the full report to uncover our full analysis.