Economic and financial trends - Danske Bank · Sweden Dancing to a different tune 11 Forecast at a glance 19 Norway Slower growth 20 Forecast at a glance 24 Finland Recovery drifting

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Investment Research

March 2013

Nordic OutlookEconomic and financial trends

� Denmark: Growth – but no jobs - the downturn is behind us, we expect Denmark to recover slowly

� Sweden: Dancing to a different tune - the economic key is set to change from minor to major

� Norway: Slower growth - but growth still solid

� Finland: Recovery drifting further - weak export performance is holding back Finnish economy

2 | March 2013 www.danskeresearch.com

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Markets Research

Editorial deadline 15 March 2013 Investment Research

Editor-in-Chief:

Steen Bocian

Chief Economist

+ 45 45 12 85 31

[email protected]

Macro economics:

Jens Nærvig Pedersen Denmark +45 45 12 80 61 [email protected]

Las Olsen Denmark +45 45 12 85 36 [email protected]

Roger Josefsson Sweden +46 (0)8-568 805 58 [email protected]

Frank Jullum Norway +47 85 40 65 40 [email protected]

Pasi Petteri Kuoppamäki Finland +358(0)105467715 [email protected]

Sales contacts:

Thomas Thøgersen Grønkjær Head of Markets Research +45 45 12 85 02 [email protected]

Rolf Kofoed Head of Sales Copenhagen +45 45 12 69 92 [email protected]

Henrik Voetmann Mikkelsen Global Head of Equities +45 45 14 73 05 [email protected]

Anders Damgaard Derivatives Sales and

Structuring

+45 45 12 85 50 [email protected]

Jesper Ronald Petersen FX Sales and Structuring +44 (0)20 7410 8149 [email protected]

Bo Wetterstein Debt Capital Markets +45 45 14 72 83 [email protected]

Lars Worsøe Andersen Fixed Income +45 45 14 69 97 [email protected]

Torben Frederiksen Head of Sales and Sales

Trading, US

+1 212 293 0340 [email protected]

This publication can be viewed at www.danskebank.com/danskeresearch

Statistical sources: Datastream, Ecowin, OECD, IMF, National Institute of Social and Economic Research, Statistics

Denmark and other national statistical institutes as well as proprietary calculations.

Important disclosures and certifications are contained from page 37 of this report.

http://www.danskebank.dk/analyse



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Contents

Denmark Growth – but no jobs 4

Forecast at a glance 10

Sweden Dancing to a different tune 11


Norway Slower growth 20


Finland Recovery drifting further 25


Global overview US take-off to drive global recovery 31

Economic forecast 35

Financial forecast 36

The Nordic Outlook is a quarterly publication that presents Danske Bank’s view on the economic outlook for

the Nordic countries. The quarterly publication the Global Scenarios sets out our global economic outlook.

Updated economic forecasts for the following countries and regions are available at

www.danskebank.com/danskeresearch:

Denmark

Sweden

Norway

Finland

US

UK

Eurozone

Switzerland

Central and Eastern Europe

Asia



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Denmark

Growth – but no jobs

2012 was a year of economic decline. Exports were hit particularly

hard, with the European economy generally stuck in reverse gear.

This fed through to the labour market, with falling employment.

However, we believe the economic downturn is behind us and the

coming years will bring growth in the Danish economy.

The brighter outlook for the global economy is particularly good

news for the Danish economy in its current predicament, where scope

for expansionary economic policy is limited.

We expect healthy growth in domestic demand this year, with

increases in private consumption, public consumption and business

investment. Exports will be boosted by the global recovery.

We believe that the labour market hit bottom last year. Employment

will be largely unchanged this year, while next year economic growth

will be strong enough for a slight increase.

Return to growth

Although the Danish economy took a surprisingly steep dive at the end of

2012, we remain cautiously optimistic and forecast weak positive growth in

the coming years. However, the big dip in economic activity at the end of last

year does mean that we do not expect growth to be any higher than 0.4% this

year. Not until 2014 are we likely to see a more normal rate of growth.

Growth is expected to be fuelled by gently rising private consumption,

growing investment activity until the government’s investment window

closes and a slow improvement in exports driven by recovery in the global

economy.

Our expectation of slight growth in private consumption is based on

disposable income, which fell in both 2011 and 2012 and was the main

reason for the very weak consumption growth in those years. In 2013 and

2014 we anticipate a gradual increase in disposable income thanks to lower

inflation, interest rates and tax cuts. Also, we do not expect consumption to

face the same headwinds from the housing market.

There has been much talk about growth and even more about job creation in

the economic debate. Fiscal stimuli will only have a very limited impact on

growth in the coming years. The government has extremely little fiscal

leeway, making it difficult for us to turn the economy around under our own

steam. Despite these limitations, economic policy will still have a slight

expansionary impact. Things are also very tight when it comes to job

creation. Although there were signs of improvement in Q4 12, it is hard to

find indications of any real turnaround in the job market. We anticipate

largely unchanged employment in 2013.

Changes relative to previous forecast

Source: Statistics Denmark, Danske Bank

Downturn is behind us


Growth dependent on global recovery

Source: Macrobond

2013 2014 2011 2012

GDP 0.4 1.5 0.7 1.6

Private consumption 0.4 1.1 1.3 1.2

Public consumption 1.2 0.2 0.6 0.8

Gross fixed investment 0.3 -0.5 2.1 -1.5

Exports 0.1 3.2 1.6 3.6

Imports 0.0 1.6 2.9 2.0

Gross unemployment (thousands) 160 159 170.1 170.8

Inflation 1.3 1.9 1.5 1.7

Government balance, % of GDP -1.4 -0.3 0.3 -1.8

Current account, % of GDP 4.1 4.7 4.8 4.9

Current forecast Previous forecast

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

2007 2008 2009 2010 2011 2012 2013 2014

% growth in GDP


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Only in 2014 will there be a slight rise in the number of jobs. The

government’s ‘growth plan’ will not have any great impact on the outlook for

job creation, but in the slightly longer term it may boost output in the Danish

economy and so have a positive effect on our overall prosperity.

While growth has been less than impressive, the Danish economy is strong in

other areas. We predict solid current account surpluses throughout the

forecast period, and the budget deficit is likely to be moderate. When it

comes to public finances, there is now reason to expect the extraordinary

income from the early taxation of capital pensions to be spread across both

2013 and 2014. We still expect this tax rescheduling to give public finances

an artificial boost of DKK40bn.

We have not radically altered our expectations for the Danish economy since

our previous forecast in December. The weak Q4 last year is the main reason

why we have revised down our growth expectations. On the other hand, the

labour market has surprised on the upside, which means that we no longer

anticipate a slight decline in employment.

Consumption treading water

There are currently no signs of any real upswing in private consumption on

the back of the crisis. Somewhat surprisingly, consumption fell in H2 12, and

growth over the year as a whole was just 0.5%, following on from a similarly

sized decrease in 2011. The higher level of consumption in 2012 is, of

course, due to the repayment of early retirement contributions, as real

disposable income fell. In terms of consumer confidence, there has not been

any fundamental change in households’ spending plans and indeed it is

difficult to see why there should have been – neither the housing market nor

the job market has taken a turn for the better.

Consumption indicators do not point to any notable increase in the current

quarter either, rather the reverse. That said, it should be noted that normally

reliable indicators such as Dankort debit card transactions have become

harder to interpret since the abolition of shopping hours legislation, which

has changed shopping patterns. We expect the rise in real incomes in 2012 to

be reflected in an increase in spending later in the year, leaving the

propensity to consume largely unchanged. In 2014 a general improvement in

the economic climate and higher employment in particular will probably

bring consumption growth that is not fuelled solely by income growth.

Private consumption decreased by 2.2% from 2007 to 2012, but retail sales

fell far further. Housing consumption, as calculated in the national accounts,

boosted overall private consumption by almost 1% during the same period.

At the onset of the crisis it was mainly car sales that were pulling down

consumption, but this effect has now reversed. Today almost all the

components of the consumption of goods are appreciably down on 2007 –

including food, where there has been a marked shift towards discount lines.

We expect employment to pick up in 2014


Prospect of growth in private consumption

Source: Statistics Denmark, Danske Bank Markets

Housing consumption has boosted private

consumption

Source: Statistics Denmark, Danske Bank Markets

NB: The chart shows the cumulative contribution to growth in

private consumption calculated in chained prices from its various

subcomponents.

2730

2740

2750

2760

2770

2780

2790

2010 2011 2012 2013 2014

Employment, incl. forecast

(thousands)

9293949596979899

100101102103

2007 2008 2009 2010 2011 2012 2013 2014

Private consumption, incl. forecast, chained

prices (2007=100)

-5.00

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2008 2009 2010 2011 2012

Other

Housing

Leisure

Transport and communicationAcquisition of vehiclesFurnishing

Electricity and heatingBeverages and tobaccoFood

Pct. point


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Sharp fall in inflation

The annual rate of inflation fell by 1.1pp in just four months and is now down

at 1.2%. The abolition of the fat tax and the absence of last year’s surge in

energy prices are among the main reasons for this, but 0.3pp of the drop is

due to a surprisingly steep fall in transport insurance premiums. Private-

sector wage growth is still around 1.5%, which means that 2013 could bring a

marginal increase in real wages after two years of decline. Add in lower taxes

and interest rates, and real household disposable income could rise by around

1% this year. 2014 will probably bring flat real wage growth, much smaller

tax savings and no further decrease in interest rates, but households will

benefit from rising employment.

Fragile housing market

The housing market continues to flounder. Although the decline in property

prices slowed in 2012, it is still too early to talk about a turnaround.

According to Statistics Denmark’s property price index, prices for houses

were exactly the same at the end of 2012 as they were a year earlier. Given

that prices of other goods and services climbed around 2% during the same

period, it is clear that the market is still under pressure. Prices for holiday

homes fell by 2.6% over the same period, and only owner-occupied

apartments showed signs of a turnaround, gaining 7.9% in 2012. However,

apartments make up only a very small part of the overall housing market, and

it is not a given that higher apartment prices will lead to higher house prices,

so to claim that the housing market as a whole has turned the corner would be

going too far.

The housing market will continue to benefit from extremely low interest rates

in the coming years, which is why we expect a slight rise in house prices –

but the rate of increase will probably be below general inflation, which goes

to show that the market is in far from good shape, so it is debatable whether

this really is a turnaround. And while we expect property prices to rise

slightly, we cannot rule out a further fall. This remains a risk, but with the

prospect of continued low interest rates, only gently falling employment and

rising disposable income, we are fairly confident that prices will rise.

There has been some talk recently about the expiry of the repayment-free

period on interest-only mortgages issued in 2003. However, we do not expect

this to send shockwaves through the housing market within our forecast

horizon. House prices are still above the levels of 2003 and 2004, which will

make it possible for most homeowners to remortgage in a way that makes the

increase in payments manageable. However, we cannot rule out some

homeowners feeling the squeeze in 2015-17. This could potentially lead to

more homes on the market and so put downward pressure on prices, but this

is unlikely to have any major impact on the housing market over the next two

years. We expect a stable to gently falling number of repossessions over the

next two years.

Tax cuts pull down inflation

Source: Statistics Denmark

Housing market yet to turn around


Repossessions have peaked



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Days of negative interest rates coming to an end

Money market rates in the euro area pushed up at the beginning of the year,

putting a slight pressure on the krone and forcing the Danish central bank,

Danmarks Nationalbank (DN), to intervene and then raise its lending and CD

rates by 10bp in January to support the currency. This can be put down to a

general improvement in the global economy, and in particular the decreasing

risk of euro collapse, rather than dwindling confidence in the Danish

economy. There are no signs that investors have seriously begun to abandon

Denmark as a safe haven.

We expect the ECB to leave interest rates alone in the coming years, but it is

not inconceivable that Danmarks Nationalbank will raise its rates again. If the

global economy continues to recover and the economic situation in the euro

area continues to settle, the period of negative interest rates in Denmark

could soon be over. Everything points to a modest increase in the DN’s rates.

This could lead to small rises in mortgage rates, but they will still be very

low.

Higher employment on the horizon

The number of people in work fell by 8,000 during the course of 2012. This

breaks down into a decrease of 5,000 in the private sector and a slightly

smaller drop of 3,000 in the public sector. Given the relatively severe

economic downturn, it was surprising that employment did not fall further.

Growth in the Danish economy is likely to be on trend during the forecast

period. We expect this to keep employment at a stable level this year and

bring a small increase next year. We have already seen slight positive signs

from the job market. Employment rose at the end of last year, and

unemployment has fallen at the beginning of this year. The number of

vacancies has also increased over the past year. The employment growth we

predict for 2014 will be mainly in the private sector, as more subdued growth

in public expenditure will limit the scope for growth in public-sector

employment.

The labour force has shrunk by almost 100,000 since 2008 but has grown

again slightly in recent quarters. The big decrease in the labour force means

that the rise in employment will not necessarily lead to lower unemployment.

There is a reserve of labour in the student population and it is not

inconceivable that greater demand for labour will be met to some extent by

imported labour, for example in the construction industry. Thus, despite

slight growth in employment during the forecast period, we do not expect any

decrease in unemployment.

Productivity gap widened in 2012

Labour productivity was unchanged in 2012. The reason may be that the

sharp downturn in the economy took employers by surprise – certainly the

year’s business confidence data did not indicate that they anticipated

contracting activity.

It may also be because there was an expectation among employers that the

downturn was only temporary and growth would return this year. Both

The central bank raised its rates in January


Decline in the labour force means an increase in

the labour reserve


NB: The labour force is defined as the number of people in

employment plus the number of unemployed people excluding job

creation schemes.

Employment up at the end of the year



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factors could explain why employment did not fall further than it did last year

given the steep drop in GDP.

Last year’s weak productivity growth can presumably also be put down to the

usual rigidities in the Danish labour market and the Danish economy, and we

do not consider it a reflection of any structural shift in the economy.

Companies have, however, been compensated to some extent via weak wage

growth. Whatever the case, the lack of productivity growth means that the

productivity gap widened last year. In the short term, this gap will limit the

scope for recovery in the labour market even if demand starts to pick up.

Public consumption growing again

Public consumption got back up to speed in 2012, with quarterly growth

roughly around the average seen in the years before the crisis. The

government’s ‘growth plan’ assumes slow growth in expenditure in the

coming years. We therefore expect public consumption to climb at more or

less the same rate this year as in 2012 and somewhat more slowly next year.

The government deficit probably exceeded the EMU limit of 3% of GDP last

year, but is likely to fall back in line this year. The early taxation of capital

pensions will give public finances a temporary boost. Originally the plan was

to offer a discounted rate of tax in 2013, but the ‘growth plan’ has extended

this into 2014. We reckon that the scheme will bring in non-recurring

revenue in the region of DKK 40bn, with the bulk of this now coming in

2014.

Global recovery to boost exports

Exports had a horrendous end to 2012, falling in both Q3 and Q4, the latter

quarter being particularly difficult for the global economy, with some of

Denmark’s biggest trading partners seeing a fall in activity. This is probably

the reason for the downturn in Danish exports.

The effective krone exchange rate has weakened somewhat over the past

month but is still some 3% stronger than when it bottomed out last summer.

This has made Danish goods more expensive abroad. However, the reasons

for this movement are actually good news for Danish exports, namely the

marked easing of monetary policy in the US and Japan over the past six

months and the latest improvements in Europe, which have reduced the risk

of euro collapse. Both effects have boosted the euro and therefore also the

krone, and both will help stimulate growth in the global economy. This

means higher export market growth and so stronger demand for Danish

goods.

We expect healthy growth in exports in the coming years. The monetary

easing in the US and Japan is expected to have a positive knock-on effect on

demand in Europe, home to our most important export markets. There is also

the prospect of growing domestic demand, fuelled by growth in private

consumption, public consumption and business investment.

We expect some of the increase in domestic demand to be met by rising

imports. Growth in domestic demand will reduce the current account surplus

Unchanged labour productivity in 2012


NB: Labour productivity is defined as gross value added in chained

prices per employee.

Public consumption grew in 2012


Exports struggled last year



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slightly, but there is still the prospect of further strong surpluses in the

coming years.

Investment Window to lift business investment

There was moderate growth in investment as a whole in 2012. The bringing

forward of public investments as part of the government’s Kick Start

programme made a healthy contribution to investment growth, while the

biggest positive contribution came from an increase in business investment.

Pulling the other way was a sharp decrease in housing investment. We expect

further moderate growth in the overall level of investment this year. On the

one hand, the normalisation of public investment will pull down investment

activity somewhat. On the other, we expect the government’s Investment

Window, which closes at the end of 2013, to result in business investments

being brought forward from 2014. This will mean markedly increased

business investment towards the end of this year and then reduced levels in

early 2014. Investment activity next year will probably be bolstered by a

generally slightly brighter economic outlook.

Moderate investment plans



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Denmark: Forecast at a glance

Source: Statistics Denmark, Danmarks Nationalbank, Reuters EcoWin, Danske Bank

National account 2011 2011 2012 2013 2014

DKK bn (current prices)

Private consumption 874.5 -0.5 0.5 0.4 1.1

Government consumption 508.1 -1.5 0.5 1.2 0.2

Gross fixed investment 311.7 2.8 1.2 0.3 -0.5

- Business investment -1.8 4.1 3.6 0.2

- Housing investment 14.6 -9.8 -2.0 1.6

- Government investment 4.2 10.6 -10.3 -7.7

Growth contribution from inventories 3.6 0.5 -0.5 0.0 0.0

Exports 956.8 6.5 1.1 0.1 3.2

- Goods exports 593.4 5.9 -0.4 0.7 3.0

- Service exports 363.4 7.6 3.6 -0.8 3.7

Imports 863.3 5.6 2.7 0.0 1.6

- Goods imports 552.7 5.4 3.1 0.9 0.8

- Service imports 310.6 5.9 1.8 -1.7 3.0

Gross domestic product 1791.5 1.1 -0.6 0.4 1.5

Economic indicators 2011 2012 2013 2014

Current account, DKK bn 101.2 107.0 75.0 90.0

- % of GDP 5.6 5.9 4.1 4.7

General government balance, DKK bn -32.0 -72.0 -25.0 -5.0

- % of GDP -1.8 -4.0 -1.4 -0.3

General government debt, DKK bn 835.0 763.0 753.0 743.0

- % of GDP 46.6 42.0 40.7 38.9

Employment, ex. leave (thousands) 2767.0 2754.0 2755.0 2764.8

Gross unemployment (thousands) 159.8 162.0 159.6 159.1

- % of total work force (DST definition) 6.0 6.1 6.0 6.0

Oil price - USD/barrel 111.0 112.0 115.0 107.0

House prices, % y/y -2.8 -3.4 1.0 0.6

Private sector wage level, % y/y 1.8 1.6 1.5 1.9

Consumer prices, % y/y 2.8 2.4 1.3 1.9

Financial figures 20/03/13 +3 mths +6 mths +12 mths

Repo rate, % p.a. 0.30 0.30 0.40 0.50

2-yr swap yield, % p.a. 0.66 0.80 0.90 1.05

10-yr swap yield, % p.a. 1.85 1.95 2.25 2.50

EUR/DKK 745.5 746 746 746

USD/DKK 573.3 549 541 557


Nordic Outlook

Sweden Dancing to a different tune

The Swedish economy has encountered multifaceted risks over the past few years, all with international origin.

The fundamental strengths of the Swedish economy, pared with extraordinary measures from economic policy makers both at home and abroad, have nonetheless made the Swedish economy able to withstand most adversities.

With prospects of a gradual global recovery led by economies in the Americas and Asia, moderating near-term downside risks in euroland, and a possible reawakening of the Japanese manufacturing machine, we feel that the economic key should be set to change from minor to major.

And being an archetypical ‘small open economy’, Sweden is likely to benefit, despite a somewhat stronger SEK (in real terms), which is why we have lifted our forecast a couple of notches for both 2013 and 2014.

GDP-growth is now expected to reach 1.7% (1.3%) y/y in 2013 and 2.2% (2.0%) y/y in 2014. We expect the unemployment rate to slowly recede from 8% (8.5%) this year to 7.8% (8.0%) next year. Inflation is expected to reach 0.3% (0.4%) y/y and 1.7% (1.5%) y/y for 2013 and 2014, respectively. Nota Bene, the changes to our inflation forecast are mainly due to a different monetary policy outlook (see below).

The Riksbank majority should be able to take some comfort in the stabilising, even improving, global outlook and as domestic risk management apparently warrants higher rates, we expect the Riksbank to tentatively start normalising rates at the monetary policy meeting in December 2013. The prolonged hiking cycle foreseen should, however, keep the monetary policy stance expansionary throughout the forecast horizon

Our more optimistic, or perhaps less pessimistic, forecasts have not altered our views on the long-term impact of the global debt crisis on the Swedish economy. Large and important parts of our export markets are mired in recession and deleveraging is continuing to take place on a global scale. And though perhaps petering out, risks remain. The economic and political turmoil in euroland continues and domestic risks such as a deflating housing market bubble or a chokingly fast strengthening of the SEK are still very much present.

That said, one strong argument for changing our views in a more positive direction is that for the first time in many years we also see some upside risks. These pertain mainly to the combination of a stronger US housing market, a more positive financial market sentiment and an extremely lax monetary policy.

Loosing market shares, the new normal

Sources: National Institute for Economic and Social Research

(NIESR), National Institute for Economic Research (KI) and

Statistics Sweden (SCB). Danske Bank calculations.


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International demand through the cold spell

Economic and financial decision makers focused squarely on the incoming

event risks during autumn and winter, leaving activity and asset prices in a

state of contraction. However, of the main risks associated with the US fiscal

cliff we are now left with a “fiscal hump” of considerably less real effects and

despite a European political situation still in flux, we have gained a central

bank that has pledged to: “[...] do whatever it takes to preserve the euro”. In a

nutshell, it seems the old market adage “Don’t fight the FED” is applicable

also in a European setting where the above ECB wording skilfully succeeded

in veering market sentiment and sovereign risk premia to levels deemed, at

least temporarily, sustainable – without having to show neither real money

nor a detailed explanation on how the ECB would or could render the euro

irreversible.

In addition, we continue to receive good news from the US housing market,

where new houses are again being erected as household formation has finally

depleted inventories of unsold houses and outpaced the historically low

housing completions by some margin (not to mention for some time). Hence,

and to no little extent thanks to apt monetary policy measures directed on

financing of house mortgages, house prices have posted consecutive growth

for almost a year, with an apparent chance of positive dynamics through both

wealth effects and a relaxation of credit conditions. A long sought after

recovery in activity in large developing economies (the BRIC-countries by a

popular acronym) also seems to be underway, despite perhaps being

inadequate for those expecting a new world order within a year or two (at

most). Even the manufacturing giant Japan seems ready for a bold step into

the unknown with an(-other) enormous fiscal stimulus package and a new,

foolproof, resolve by the Bank of Japan to escape the liquidity trap once and

for all (herein lies also massive risks to confidence as it could be seen as

fiscal domination of the central bank, but we hope for the best).

In spite of what seems a shift in tactics from unrelenting and unpopular

austerity measures to longer-term growth-enhancing reforms (privatisation,

deregulation, etc) southern Europe, incl France, is mired in recession and we

expect little positive news from these economies near term. Luckily, the

south of Europe is a miniscule part of Swedish export markets, which is why

growth in international import demand for Swedish exports – world market

growth – is expected to hold up relatively well during the forecast horizon. In

addition, from what we can gather, many of the measures taken to stimulate

demand in growing economies are directly aimed at increasing investments,

which is an extra boon for the investment goods laden Swedish exports

industry.

In short, we expect Swedish world market growth to surpass 3% y/y in 2013

and be in line with historical averages, at around 6½% y/y in 2014.

Notwithstanding the emergence of a more positive financial market

sentiment, and stabilising real developments, downside risks are still

predominant and the dispersion and development of risks will take close

scrutiny going forward. Among these risks are possible confidence effects

from the rather mild fiscal contraction in the US, a more assertive stance

from the ECB or creditor nations on fiscal slippage in southern Europe and,


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of course, political upheaval in conjunction with elections or critical fiscal

policy decisions in both creditor and debtor nations.

Economic policy mix and asset prices

Since December, the SEK has strengthened against most currencies, and the

broad trade weighted currency index KIX has even – admittedly only in

nominal terms – touched the 100-level, something which has not been seen

since 18 November 1992, the day before the Riksbank let the SEK float

freely. In real terms, the picture is drastically different with the real SEK

being more or less in line with the average since 1992. This seemingly

distorted picture is due to differences in price developments over the years,

with lower cost increases in Sweden vis-à-vis our main competitors. The

lower relative cost developments in Sweden probably goes some way in

explaining the rising profit share of GDP and suggests that companies – in

aggregate – are more able to withstand a stronger SEK than the nominal

level of the krona suggests. It will, however, eat away at profit margins in the

exports industry, something that might put a damper on Swedish stock

markets going forward, especially since we foresee further strengthening in a

medium-term perspective.

Interest rates have risen over the past few months, on almost all maturities,

counteracting some of the additional monetary policy stimuli released over

the past few months. However, (credit) risk premia have simultaneously

decreased, leaving corporate and housing financing rates at historically low

levels on most horizons. As in most other countries, short-term interest rates

are firmly repressed by the central bank, whereas the improved market

sentiment and economic outlook have started to slowly push longer interest

rates upwards. Since the tentative rise in longer-term rates represents a

positive change in market sentiment and the economic outlook, and the

absolute levels are still close to historical lows, we do not believe that current

interest rate levels constitute any threat to the economic recovery. Any

renewed weakness in the outlook should thus be accompanied, rather than

led-on, by changes in market interest rates. This proposition is further

underlined since the Riksbank still enjoys a very high inflation fighting

credibility, further negating the risk of a stifling rise in market interest rates.

Believing that a tepid economic recovery is about to unfold, it should come

as no surprise that we expect the Riksbank to eventually initiate a hiking

cycle. However, such actions should only take place against the background

of a Swedish economy on much firmer footing, which we believe will push

the first hike deep into winter 2013/14 and thenceforth continue at a very

slow pace for the remainder of the forecast horizon (and beyond). Under any

circumstances, the foreseen hikes will keep monetary policy in expansionary

territory for a very long time, even when taking account of various structural

issues such as lower potential growth and higher structural unemployment.

The other, often overlooked, pillar of stabilisation policy is the economic

policy mix in general and fiscal policies in particular. For even in a perfect

world, where fiscal policy is concentrated on structural issues, any decision is

likely to have cyclical consequences when being promulgated through the

economy. And according to Finance Minister Anders Borg, there is room for

additional structural measures – mainly tax cuts for low and middle-income

earners – but his calculations are based on an optimistic 2.7% y/y potential

The SEK really shouldn’t pose much of a problem

Note: The real KIX index has been estimated through using

Swedish relative ULC:s

Sources: Macrobond, KI, NIESR and Organisation for Economic

Cooperation and Development (OECD). Danske Bank calculations.

We are the Anders Borg, resistance is futile

Sources: KI and SCB. Danske Bank calculations


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growth rate, which is rather far from our own 1½% y/y. We can understand

the political rationale behind such arguments, but given the strong legal

framework surrounding the sustainability of fiscal policy, the government is

likely in time (pass the forecast horizon) to be forced to cut back on some of

its promises or even reduce spending (or hike taxes). In our forecast,

nonetheless, government expenditures are set to expand by circa 1% y/y in

both 2013 and 2014, pushing central government net lending to -1% of GDP

this year, and -¾% of GDP next year.

To conclude our discussion on the economic policy mix, our estimates

indicate that while monetary policy is suitably expansionary throughout the

forecast horizon, we see a risk of overly expansionary fiscal policy

necessitating future austerity, perhaps at a more sensitive stage of the

business cycle.

The expansionary stance of domestic monetary policy is augmented by

abundant liquidity on a global scale on the back of massive quantitative

measures from all central banks in major currency areas. As can be seen from

statistics on, inter alia, portfolio investments, this liquidity has to some extent

benefitted Sweden, where foreign demand for Swedish assets has been rising

on trend for almost two years. Sovereign, corporate and housing financing

have therefore remained cheap or have become even cheaper over the last

couple of years. Despite the effect of the stronger SEK, Swedish stock

markets have thus developed on a strong note, even compared to doped stock

markets like the US, UK et al. Going forward, we expect Swedish stock

markets to develop in line with (long term) nominal GDP, id est, rise by 3 to

5 per cent a year.

Swedish housing markets have remained afloat despite a public discourse on

increased regulations of lending standards and a generally sour sentiment

during autumn last year. In some areas, a small decrease in housing prices is

visible but on a national level prices are more or less unchanged. We

continue to foresee a limited drop in house prices, amounting to 5% y/y this

year and a somewhat less pronounced drop next year, when prices are

expected to decrease by 2½% y/y. From a longer term perspective, our view

is that Swedish house prices are above their fundamental value by more than

20%, underlining that something will probably have to change; either prices

demonstrate a more abrupt correction or – in a more benign scenario –

household incomes rise while house prices remain stable.

Summing up economic and financial conditions, we believe that cheap

liquidity is no longer a restriction in the Swedish economy, it is rather a lack

of demand for credits – viable investment projects – that is lacking. This

probably has more to do with depressing expectations of future incomes than

anything else. A sustainable shift in the income outlook– in line with what we

are expecting – will nonetheless benefit from credits freely available. There is

even a non-negligible risk that this process will pick up steam much faster

than we expect due to the extremely loose global monetary conditions,

creating a not so clear cut policy dilemma for many central banks.

A stronger krona leaving its mark on growth

The global outlook is slowly becoming more positive and demand for

typically Swedish export products is on the rise. At the same time, economic

Monetary Conditions seem balanced

Note: MCI is calculated as the deviation from a filtered trend of

different interest rates and an exchange rate index (all variables

are normalised).

Source: Macrobond. Danske Bank calculations


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conditions are mostly benign, lending support to the recovery. However, the

stronger krona – though not yet at levels where it wreaks havoc on the export

industry – is likely to restrain international demand growth for Swedish

exports during the entire forecast horizon, which is why our forecast for

exports is quite subdued from a historical perspective. In 2013 export growth

is expected to be a meagre 1.5% y/y, which is largely due to a very weak

starting point to 2013, whereas Q4 over Q4 comparisons demonstrate export

growth close to 4% y/y. In 2014, we forecast export growth to improve

further at 5.1% y/y.

If Swedish exports posted a weak end to 2012, import growth was worse still.

Weak demand for industrial goods and a need to control inventories pushed

consecutive import growth into the red during H2 12. However, looking at

demand and inventory indicators, there is evidence that this inventory cycle

has run its course and Q1 should see some recoil in imports. In addition, the

stronger krona is beneficial for importers and consumers, lifting import

growth throughout the forecast horizon. All in all, we expect import growth

just shy of 2% y/y and 4% y/y in 2013 and 2014, respectively.

Taken together, and under the influence of a structurally stronger krona, this

means that net exports should start to retract growth over the coming years,

partly explaining why the net export contribution is calculated to be -0.4 p.p.

y/y this year and -0.9 p.p. y/y in 2014. Underneath these dismal figures we

nonetheless see signs of a gradual restructuring of the export sector towards

services, a product group less sensitive to currency changes.

Investments picking up steam towards the end of the

forecast horizon

The currently low growth in exports and consumption demand together with

production in the manufacturing industry running low has produced

considerable slack in the economy, which is expected to keep a lid on

investment growth during the first few phases of this year. However, our long

held view is that the slack in the economy is considerably lower than

generally perceived as a lot of the capital stock has become obsolete due to

large shifts in relative costs and exchange rates, etc, in the wake of the great

recession. These shifts necessitate investments in productive capacity in new

and growing industries. In addition, there is an excess demand for housing

and in areas where market prices exceed production costs (Tobin’s Q),

typically high population density areas, there should be room for additional

investments, even when taking our sombre outlook on house prices into

account.

Public investments are another area where we expect to see positive growth

going forward. The government has previously announced large investments

in infrastructure, etc, and there is evidence of another “shameless” election

year increase in public investments.

To sum up, we expect investment growth in 2013 to be subdued, growing by

2.5% y/y. In 2014, the above-mentioned factors are expected to come more

clearly into play and will, together with a higher overall level of demand,

produce investment growth of close to 8% y/y, on our forecasts.

SEK making imports cheaper, and the inventory

cycle stabilises again

Sources: KI and SCB. Danske Bank calculations.

Net Exports contributing negatively, the new

normal


Investment demand to pick up again



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Labour market developments should follow suit

Despite a visible weakening of Swedish labour markets in H2, the lingering

impression is one of relative stability. The newfound flexibility among both

employers and unions has let hours worked (and thus by and large also the

monthly pay check) become a buffer instead of large lay-offs at the first sign

of a deceleration. This pattern has been discernible ever since the onset of the

great recession and seems to have worked well, even though we initially

considered this merely to be traditional labour hoarding, albeit a somewhat

more sophisticated version.

Despite the labour market normally lagging growth by a couple of quarters,

we can already see some green shoots in labour market indicators. Not only

have notices of lay-offs come down close to “normal” levels, employment

plans and other survey data on the labour market have clearly turned a corner

and are for some business sectors even in expansionary territory again.

Nonetheless, investment growth has historically proven to be the perhaps

most reliable indicator for employment since investments not only demand

people to construct and install, but also to operate, new equipment. We do not

think this time around will be much different, but the large pool of people

outside the labour force might keep unemployment rates higher for longer

even with pronounced improvements in employment.

The good news is thus that labour markets seem to be through the worst, with

most indicators pointing in the right direction. Therefore, we expect

employment to at least remain stable in the near term. However, growth in

average hours worked has been depressed, which is why a more pronounced

upturn could take some time. As investment growth picks up steam and

developments in more labour-intensive industries such as construction and

retail also progress, we should nonetheless see a more substantial

improvement in both employment and the unemployment rate but we expect

that to take place mainly during next year. To conclude, we estimate that

employment will grow by less than 1% y/y in 2013 and by more than 1% y/y

in 2014. This should be enough to keep the unemployment rate stable at 8%

during the better part of this year, only to recede towards 7.6% during the

course of 2014. The large number of unemployed and people currently

outside the labour force will probably keep unemployment rates at elevated

levels for a long period of time, far beyond the forecast horizon.

Krona putting a golden touch to consumption

Household confidence is on the rise again, after facing a number of

headwinds during the latter part of 2012. Not only was the general risk

sentiment very low in the run-up to a number of decisive international events,

but notices of lay-offs shot up and the Riksbank seemed intent on driving

down the housing markets. In response, households increased their savings

further, from already very high levels, due to which 2012 consumption

growth stopped at a bleak 1.7% y/y, saved only by strong growth in the first

quarter of 2012.

Now, as these downward forces recede, we expect less weak household

consumption growth near term, but the lack of swift progress in employment

will probably keep any pent-up demand at bay for some time more.

Nonetheless, the stronger SEK is already proving to have an impact as travel

and consumption abroad have picked up and there is anecdotal evidence of

Stubbornly high unemployment rates…

Source: Reuters Ecowin

…but a strong currency makes consuming easier

Source: Reuters Ecowin


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improved pricing in – exempli gratia – clothing and shoes producing stronger

volume growth.

Next year we see a more solid improvement of household consumption, since

increased employment and a tad higher wages lift disposable incomes. In

addition, we foresee some decrease in precautionary savings. However, wise

from experiences of recent years, we have chosen not to revise this variable

to any larger extent. All in all, household consumption growth is expected to

surpass the historical average of 2% y/y in 2013 and even push close to 3%

y/y in 2014.

Resource utilisation and inflation

In the preceding sections we have touched on the main components when

looking at GDP-growth. And the lingering impression is one of an improving

economic environment, but it is a recovery that is bleak by any historical

comparison and one that is still laden with large risks to the downside, ready

to push the world economy and the export dependent Swedish economy into

the doldrums without much notice. Nevertheless, and despite apparent

downside risks, for the first time in many years, we are also able to identify

upside risks in the nexus of very strong liquidity, rising asset prices and a

more pronounced shift in sentiment.

To sum up, GDP-growth is expected to accelerate in 2013 and 2014 and we

have revised our forecasts in a more positive direction for both years. In 2013

GDP is estimated to grow by 1.7% y/y, compared to 1.3% y/y in our previous

forecast. For 2014, we have made a smaller change and now expect GDP-

growth of 2.2% y/y versus 2.0% y/y in our previous forecast.

From a historical perspective this is a meagre outcome for a recovery phase.

However, we believe that the great recession has altered the structures of the

world economy and, hence, also of the Swedish economy. The most obvious

change is an ongoing, fundamentally warranted, strengthening of the Swedish

krona that still has some way to go. The stronger SEK pushes low-value

added export companies into dire straits and some of them will probably be

put out of business or be forced to relocate production to other economies.

Still having a rather rigid labour market, the effects on the Swedish economy

are already visible – stubbornly high unemployment rates. Eventually, we

might see more decisive political measures to address this problem, but given

the highly sensitive ideological nature of the resolutions on offer, we suspect

this will take a long time. In the meantime, estimates on potential growth

should recede, and we have “guesstimated” – with the use of mainly

demographical projections –long-term GDP-growth at no higher than 1.5%

y/y. Beware, though, that given the very limited time series on hand effects

on potential estimates are difficult to assess quantitatively and are also very

sensitive to specifications.

This means that even the feeble growth rates foreseen over the next couple of

years should be able to reduce slack – increase resource utilisation – and give

way to increasing inflationary pressures. Make no mistake about it though,

current levels of resource utilisation are very low, and will be a restraining

factor in the upcoming wage negotiations during spring. The deflationary

impact of low wage growth will to some extent be balanced by low

productivity growth keeping cost pressures – measured in terms of Unit

Steady as she hopefully goes


Not as much slack as could be expected



Nordic Outlook

Labour Costs (ULC) – between 1½ and 2% y/y for the forecast horizon, levels deemed sufficient to pull inflation from current deflationary territory and towards the inflation target (2%). However, the structural strengthening of the SEK works in the other direction, which is why we will probably need to move beyond 2014 to see the operational inflation target, CPIF (CPI excluding the impact of interest costs), being attained.

Riksbank in a policy dilemma of its own

From our perspective, it should all be so simple. Contrary to many of its peers, the Riksbank has successfully managed to exit all non-standard measures during the height of the financial crisis and there is no need to support fiscal policy, which is why the discussion on fiscal dominance heard elsewhere has not even started in Sweden. This should make it possible for the Riksbank to focus more squarely on the inflation target.

This situation should be the envy of most central banks, who have rather increased non-standard measures and runs the risk of losing confidence, letting the inflation genie out of its bottle again, should they be found financing massive fiscal deficits.

However, the Riksbank has chosen to create its own, unique, policy dilemma in adding financial stability considerations into their discussions on monetary policy. According to the Riksbank, the lack of adequate instruments to control high and rising household indebtedness might to no little extent be balanced by a higher policy rate. This thinking has led to one of the most public and heated debates on the current stabilisation policy regime Sweden has seen in a very long time, since it is seen as expanding the Riksbank’s powers and obfuscating any evaluation of the Riksbank’s performance.

We will not enter that debate here, suffice to say that it has altered the monetary policy reaction function and is one of the main reasons why we believe that the Riksbank will hike as soon as December this year, even though our forecast for inflation does not by itself warrant such an early reaction. The projected hiking cycle is nonetheless cautious, with hikes at every other meeting, meaning that by end-2014 the repo rate is still at a low 2%.

Inflation is not much of an issue these days

Sources: Macrobond and SCB. Danske Bank calculations.

Riksbank hiking, but only very slowly

Sources Macrobond and Riksbank. Danske Bank calculations.


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Sweden: Forecast at a glance

Source: Danske Bank

National Accounts 2011 2011 2012 2013 2014

SEK bn

Private consumption 1672,9 2,1 1,5 2,4 2,6Government consumption 926,0 1,1 0,8 0,8 0,6Fixed gross cap formation 646,0 6,4 3,4 2,5 7,7Stocks* 40,5 0,5 -1,1 0,2 0,0Domestic demand 3245,0 2,7 1,7 1,9 3,1Exports 1748,8 7,1 0,7 1,5 4,9Aggregate demand 3285,2 3,2 0,5 2,1 3,1Imports 1531,5 6,3 -0,1 2,5 7,6Net exports* 217,0 0,7 0,4 -0,3 -0,9GDP 3502,5 3,7 0,8 1,7 2,0 - GDP, Calendar adjusted 3,7 1,2 1,7 2,2* contribution to GDP growth

Economic indicators 2011 2012 2013 2014

Trade balance, SEK bn 91,1 90,4 96,1 79,2in % of GDP 2,6 2,5 2,7 2,1Current Account, SEK bn 256,7 250,6 249,5 228,0in % of GDP 7,3 7,0 6,9 6,1

Public sector savings, SEK bn -3,5 -21,3 -36,0 -29,9in % of GDP -0,1 -0,6 -1,0 -0,8Public debt ratio, % of GDP* 38,4 37,7 37,6 37,5

Unemployment, % of labour force 7,8 8,0 8,0 7,8Hourly wages, % y/y 3,2 2,7 2,8 3,2Consumer prices, % y/y 3,0 0,9 0,3 1,7House prices, % y/y 0,8 -2,0 -5,0 -2,5* Maastricht definitionFinancial figures 19.03.13 + 3 mths + 6 mths + 12 mths

Repo-rate 1,00 1,00 1,00 1,252-yr swap yield 1,40 1,70 1,80 1,9010-yr swap yield 2,36 2,50 2,60 2,65SEK/EUR 833 830 830 820SEK/USD 643 610 601 612

Vol growth in %


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Norway

Slower growth

More subdued growth in oil investments and tighter credit policies

have resulted in slower growth in the Norwegian economy.

Household savings rate is up despite low interest rates, high house

prices and low unemployment. This, together with tighter capital

requirements on banks, should reduce the risk of a housing bubble.

Low inflation and low interest rates in other countries have kept

Norwegian rates down. We see only modest downside risk to

Norwegian interest rates going forward.

Return to trend growth

The Norwegian economy has come through the European debt crisis

relatively unscathed. Oil investment has increased considerably and made a

big contribution to Norway’s economic growth – both directly through

increased activity and indirectly through strong income growth. Now,

however, there are signs that these growth impulses are beginning to wane.

Oil companies have revised down their investment estimates for this year,

which is likely to reduce the growth impulses for the supply industry. At the

same time, the announced tightening of capital adequacy rules has caused

Norwegian banks to turn off the taps. Higher interest rate margins and stricter

lending practices have had an effect, especially on the potential for

businesses to expand. On the other hand, despite still weak growth in Europe,

there are signs of exports beginning to pick up, and we therefore expect a less

negative contribution to growth from net imports this year compared to 2012.

Still strong real wage growth should secure buoyant consumption growth.

Developments in the housing market are less certain than earlier due to

stricter bank regulations. Our main scenario remains that these measures will

contribute to a needed slowing of house price growth but that home building

will not be choked by a dearth of capital. Hence, employment growth should

remain buoyant, unemployment should remain low and wage growth should

be similar to last year. We expect the increase in bank lending rates to grant

Norges Bank (central bank) the leeway to keep policy rates low for the rest of

the year. NOK is likely to remain strong but the risk of significant

strengthening from here has declined.

Weaker growth – temporarily

Source: Reuters EcoWin, Danske Bank Markets

08 09 10 11 12 13 14

-1,5

-0,5

0,5

1,5

2,5

3,5

-1,5

-0,5

0,5

1,5

2,5

3,5% y/y % y/y

<< Mainland-GDP


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Nordic Outlook

Growth slows due to oil investments and banks

Strong growth impulses from the oil sector have helped prevent any serious

impact on the Norwegian economy from the weakness in global activity.

Norwegian activity levels are more or less normal and growth has been above

trend despite capacity utilisation having increased. However, clear signs are

emerging of growth impulses beginning to wane. The reason appears to be a

mixture of weaker growth in the oil-related industry and the impact of stricter

credit policies on Norwegian banks. Hence, uncertainty on the economic

outlook for 2013 has increased somewhat, though our main scenario is still

for growth to remain around trend.

Norges Bank’s regional network is now indicating growth of around 0.5%

q/q in Q1 and around 0.7% q/q over the next two quarters. This is down

somewhat on 2012 growth rates but nevertheless indicates growth of around

trend. The survey showed the slowdown to be broadly based but a drop in the

activity of oil-related businesses and business service companies has had a

particularly negative effect on the main index.

Oil investments should also make a substantial contribution to growth in

2013, though it will probably be somewhat lower than in 2012. Moreover, the

latest investment figures show that growth could be rather lower than what

we had previously expected. According to Statistics Norway’s figures, oil

investments should grow by just over 10% in current prices in 2013, while

the November figures indicated almost 15% growth.

There is little evidence to suggest that price or demand forecasts for the

global oil market have changed significantly since the previous survey in

November. On the other hand, we know that several major contracts have

been awarded to foreign suppliers, which could suggest capacity limitations

in the Norwegian supply industry. But unless the ‘reflagging’ is due to long-

term cost disadvantages for the Norwegian supply industry, this should

simply mean a postponement of growth impulses from the oil business to the

mainland economy.

The second important drag on growth is the tighter credit policies of

Norwegian banks. The announced tightening of bank capital requirements

has prompted both a re-pricing of loans and, not least, a reduced appetite for

new projects among the banks. This appears to have hit the property market

in particular, where the financing of both commercial and residential property

projects has become considerably more difficult.

As a result, corporate investment activity has slowed. New commercial

property starts, for example, have fallen sharply since last summer.

That said, we believe the worst will soon be behind us, both in terms of the

slowdown in the oil supply industry and bank credit policies. As global

growth, despite everything, appears to be picking up, we also expect the drag

from net imports to be somewhat less than last year.

Income-driven consumption growth

Norwegian households continue to express optimism. While we saw a

slowdown in consumption that lasted until October 2012, this year has got off

A soft spot

Source: Norges Bank, ReutersEcoWin, Danske Bank Markets

Credit tightening hurting corporates

Source: ReutersEcoWin

02 03 04 05 06 07 08 09 10 11 12

-3

-1

1

3

5

7

-1,5

-0,5

0,5

1,5

2,5

3,5index % y/y

<< Regional survey

Mainland-GDP >>

02 04 06 08 10 12

-2,5

2,5

7,5

12,5

17,5

22,5

200000

250000

300000

350000

400000

450000 m2% y/y

<< Non-residential buildings

Credit, corporates >>


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to a fine start. Retail sales grew 1.2% m/m in January, while car sales grew

more than 10% y/y in February. We estimate that household disposable real

income will grow by around 4% again in 2013. Real wage growth should be

around 2.5% and employment growth approximately 1.5%. The big question

for consumption growth is therefore whether the savings rate will continue to

climb. Last year the savings rate increased from 8.7% to 9.4%, which

dragged consumption growth down by 0.7 percentage points (pp).

The increase in the savings rate occurred despite low unemployment, low

interest rates, high house prices and an expansive fiscal policy. It may have

been partly due to the increased uncertainty surrounding economic growth

among Norway’s neighbours, while greater focus on the need to increase

pension savings in connection with the pension reform probably also played a

part. Regardless of the reason for the increase in the savings rate, the result is

that the financial situation of households is substantially more solid than was

the case in the years leading up to the financial crisis. In fact, the savings rate

is increasing even though debt growth is high.

The solidity of household finances is also having an effect on the housing

market. Prices continue to rise, sales times are shrinking and the inventory to

sales ratio continues to fall. House prices rose 7.7% overall in 2012.

Housing market developments have forced the authorities to propose

tightening bank capital adequacy rules to slow growth. The changes to the

rules have not yet been finalised but just the fact that they have been

proposed will increase the banks’ financing costs on home loans. This has

already pushed Norwegian mortgage rates roughly 0.3pp higher. Depending

on the final text of the rule changes, mortgage rates could well rise further.

We expect that higher mortgage rates could help slow house price growth,

especially as this comes in the wake of a tighter credit policies at the banks.

However, we do not believe these changes will cause the housing market to

collapse. Wage growth appears set to be around 4% this year too, while

mortgage rates will likely settle at 4-4.25%, i.e. still very low real rates.

High house prices will probably also mean housing investment growth

remaining strong. Housing investment surged more than 7% in 2012 and new

home start figures suggest that growth could be just as high in 2013. Hence,

the growth contribution from housing investment should also be similar to

last year.

After 10 years of continuously rising house prices and debt burdens, the

financial position of households has to be considered a risk factor. Norway is

one of the few Western countries where households are more indebted (in

terms of debt relative to disposable income) than they were prior to the

financial crisis of 2007-08. Nominal house prices have also risen strongly and

are now more than 25% above the previous peak in 2007. However, as

mentioned, household savings rates have continued to climb in recent years.

Moreover, the hope is that the tighter capital adequacy rules will help

dampen growth in house prices and household debt, meaning a housing and

debt bubble can be avoided.

Return of the consumers

Source: Reuters EcoWin

Housing: stable price growth


09 10 11 12

118

120

122

124

126

128

130

118

120

122

124

126

128

130 2005=100 2005=100

<< Retail sales ex. gas stations

05 06 07 08 09 10 11 12

-10

-5

0

5

10

15

20% y/y % y/y

Housing prices >>


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Can the inflation target be reached?

Despite high capacity utilisation, low unemployment and high wage growth,

there is no sign of inflation increasing. Underlying inflation has remained

largely unchanged over the past year. Moreover, the strong NOK exchange

rate combined with low global price growth will probably ensure negative

price impulses on imported goods in 2013 too. More surprising perhaps is

that domestic price impulses are so modest when activity levels are so high.

This may be due to a number of factors, including that the high level of prices

in Norway means a great deal of trade is ‘lost’ to cross-border and internet

shopping and trips abroad.

Nevertheless, it will soon be time to ask when, and not least how, the inflation

target can be reached. With the exception of the period following the

weakening of NOK in autumn 2008, imported price growth has been around -

0.5% y/y since the inflation target was introduced. As around a third of core

inflation is imported inflation, that means domestic inflation has to be 4% to

reach the inflation target of 2.5%. Productivity growth in the consumption

sectors of 1-1.5% means wage growth of 5-5.5% is needed to reach the

inflation target. The question then is whether this is possible or indeed

desirable. Alternatively, Norway could wish for a pronounced weakening of the

NOK exchange rate, without worrying about what it should be due to.

Strong NOK and low rates

The strength of Norway’s government finances, combined with much higher

capacity utilisation than in other Western countries, probably means that the

NOK exchange rate will remain relatively strong until the problems in

Europe diminish significantly. On the other hand, we can see that some of the

capital that flowed into Norway when the situation looked bleakest is now

beginning to return to its homeland. This is probably due to a brighter global

outlook and thus a greater appetite for risk. Nevertheless, there is reason to

underline that the relative economic situation suggests that NOK will remain

comparatively strong.

The tightening of regulations governing the capital adequacy of the banks has

prompted higher lending rates from Norwegian banks. This should help ease

the pressure on Norges Bank to hike interest rates. As the proposal on the

table looks now, mortgage rates could increase by 0.5pp as a result. This

would help postpone the need to hike interest rates by a similar amount but

still means that policy rates should increase in 2014 and 2015. A gradual

hiking of interest rates by Norway’s trading partners should also make it

easier to raise rates in Norway without the exchange rate firming excessively.

In its Monetary Policy Report from March, Norges Bank indicated that the

policy rate will remain unchanged until ‘spring’ 2014 and then be raised

gradually to between 2.5% and 3% by the end of 2015. The published rate

projection also opens the door to rates being cut this year if economic growth

comes out weaker than expected. However, we expect interest rates to remain

unchanged until the first hike in March 2014.

Negative imported inflation


The market disagrees with the central bank


03 04 05 06 07 08 09 10 11 12

-4-3-2-1012345

-4-3-2-1012345

% y/y % y/y

<< Domestic inflation

Imported inflation >>

10 11 12 13 14 15 16

1,50

1,75

2,00

2,25

2,50

2,75

3,00

3,25

1,50

1,75

2,00

2,25

2,50

2,75

3,00

3,25% %

<< NOKFRA

Norges Bank: MPR 1/13 >>


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Norway: Forecast at a glance

Source: Danske Bank

National accounts 2011(2010-prices) 2011 2012 2013 2014

NOK bn

Private consumption 1149,8 2,5 2,9 3,0 3,6Public consumption 580,7 1,8 2,1 1,6 2,0Gross fixed investment 560,7 7,6 8,1 5,5 4,6 Petroleum activities 162,0 14,1 14,4 8,4 8,2 Mainland Norway 383,0 8,5 3,9 4,2 2,9 Dwellings 128,2 21,9 7,4 6,5 2,1 Enterprises 170,3 3,5 2,7 1,9 2,5 General government 84,5 2,2 1,4 5,5 4,9Mainland demand 2113,6 3,3 2,9 2,8 3,2Growth contribution from stockbuilding 0,1 0,0Exports 1033,6 -1,8 2,2 -1,6 1,4 Crude oil and natural gas 446,0 -6,2 0,9 -6,8 -3,5 Traditional goods 307,1 0,0 2,6 1,0 4,0Total demand 3435,8 1,8 3,2 1,7 2,9Imports 779,0 3,8 3,3 4,2 3,8 Traditional goods 460,5 3,6 2,1 2,3 3,9Growth contribution from net exports -2,1 0,0 -1,8 -0,6

GDP 2656,8 1,2 3,2 2,2 2,7 GDP Mainland Norway 2108,1 2,5 3,5 2,8 3,5

Other posts 2011 2012 2013 2014

Employment, % y/y 1,3 2,2 1,6 1,8Labour force, % y/y 1,1 1,8 1,5 1,6Unemployment (LFS), % 3,3 3,2 3,1 3,0Annual wages, % y/y 4,2 4,0 4,0 4,2Consumer prices, % y/y 1,2 0,8 1,6 2,0Core inflation 0,9 1,2 1,3 1,7

Financial figures 19/03/2013 + 3 mths + 6 mths + 12 mths

Deposit rate 1,50 1,50 1,50 1,752y swap rate. % 1,96 2,00 2,00 2,1010y swap rate, % 3,17 3,25 3,30 3,40EUR/NOK 7,50 7,25 7,20 7,15USD/NOK 7,79 5,33 5,22 5,34

Vol growth in %


No

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Nordic Outlook

Finland

Recovery drifting further

GDP contracted 0.2% in 2012. Domestic demand slipped, especially

construction, and exports suffered from the euro crisis. Consumption

brought some growth and jobs to services.

We have revised down our 2013 outlook for Finland to take into

account the weak Q4 12 figures and business surveys. GDP is now

forecast to grow 0.3% in 2013.

Finnish exports have underperformed the growth in export markets,

due to the high weight in investment goods, poor competitiveness and

Nokia downscaling. Emerging markets, especially Russia, offer

growth possibilities.

New normal in private consumption means modest growth figures in

the future. Real wages are increasing only slightly and the relatively

low savings ratio does not provide much additional room for

spending.

Housing market looks relatively stable. Prices are expected to remain

at current levels despite low interest rates and shortage of housing

construction. Tax hikes and higher loan margins dampen the near-

term outlook.

Unemployment rate is expected to rise above 8% in 2013 before

economic growth and shrinking labour supply decrease

unemployment in 2014. Inflation and wage growth decline.

Bouncing around zero growth

Gross domestic product fell by 0.2% in 2012. Technically speaking Finland

avoided a recession, because third quarter GDP was revised up to a meagre

growth of 0.1% q/q. GDP fell more than expected during the last quarter,

which gave a poor start for 2013. For most practical purposes Finland is in a

recession and conditions for a strong recovery look weak. We expect net

exports to bring GDP back to positive trend later this year, while domestic

demand continues to crawl slowly at best both in 2013 and 2014.

The fall was broad based. Exports fell towards the end of the year and were

1.4% lower than in 2011. Investments turned weaker, especially construction

activity decreased. Private consumption regained some strength during H2

from the slump in Q2, although the numbers were far weaker than during Q1,

when private consumption was supported by wage increases and an

anticipated motor vehicle tax hike.

Manufacturing output fell towards the end of the year and recorded a total

decline of 2.2% in 2012. According to monthly statistics, industrial output

was 4.8 % down y/y in January 2013, giving a weak starting point for current

year.

Changes relative to previous forecast

Source: Danske Bank

OECD leading indicator implies recovery in Q2

00 02 04 06 08 10 1294

96

98

100

102

104

-15.0

-10.0

-5.0

0.0

5.0

10.0 GDP monthly indicator, y/y

3 month moving average

OECD leading indicator,

6 month lead


FINLAND

2013 2014 2013 2014

GDP, % 0.3 2.0 0.5 2.2

Unemployment 8.3 8.0 8.2 7.9

rate, %

Inflation, % 2.0 2.0 2.5 2.0

Earnings, % 2.6 2.2 2.7 2.5

Housing prices, % 0.5 2.5 1.5 2.5

Current account, -1.0 -0.7 -1.0 -0.5

% of GDP

Public debt, 56.0 57.0 54.5 55.0

% of GDP

Current forecast Previous forecast


No

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Nordic Outlook

Reflecting the closure of Nokia manufacturing in Finland and weak demand

for investment goods, output fell most in the electrical and electronics

industry, by 14.8%, and in the metal industry by 11.8%.

Leading indicators are mixed in the sense that consumer confidence has

slightly improved but construction confidence is very weak. The OECD

leading indicator, which has been a fairly robust indicator in recent years,

supports our view that Finland could pull out of the recession after the weak

Q1.

We have revised our estimate for 2013 downward to GDP growth of 0.3%

(previously 0.5%) as we see no fast solutions being implemented to bring

significant growth to the euro area. Assuming that China and the US lead the

global recovery, we expect Finland to reach 2.0% growth in 2014. Obviously,

a full-blown political crisis in the euro area or other major economic events

would not leave the Finnish economy untouched.

Leaner years for consumers ahead

Consumer buying power was exhausted during 2012, while consumption

grew substantially in 2010 and 2011 on the back of low interest rates and

rising real wages. In Q1 12 one-off salary payments and tax changes

supported private consumption growth to 2.4% q/q but in Q2 we saw the

biggest decline in private consumption in the history of the quarterly statistics

(started in 1975) with a dive of 2.3% q/q. Consumer spending normalised in

H2 as private consumption rose 0.8% y/y.

The short-term outlook is weak as consumer confidence remains at low

levels. Although retail sales rose slightly in January 2013, car registrations

remained very weak. The full-year outlook is challenging for retail sales,

because the increase in purchasing power is expected to halt. In the

forecasting period wage growth will be marginally higher than inflation at a

time when tax increases will take their share as well. We also expect

consumer confidence to remain at low levels as employment figures continue

to weaken in H1 13. Low interest rates and a reasonably steady (relatively

speaking) employment level will help sustain private activity but past growth

figures are not realistic nor are they sustainable. The outlook further into

2014 is also restrained with only modest wage growth and an already low

savings rate with little additional room to boost spending. We expect private

consumption to grow 0.8% in 2013 and 1.2% in 2014.

Inflationary pressures are modest because of the recession. Largely due to

global energy prices and tax hikes inflation was 2.8% in 2012. Despite a full

percentage point hike in VAT, inflation was below 2% in January-February

2013. The surprisingly low number could have been caused by a prolonged

discount sale period and some of the tax changes will feed through slowly.

We expect an annual average inflation of 2.0% both in 2013 and 2014.

Exports fall before global recovery comes to the rescue

The volume of exports fell 1.4% in 2012 and the final quarter was weakest.

Finnish exports have been lagging behind the growth in international trade,

which could emanate from the low diversification in key export products as

well as from the large share of metal engineering, paper and other cyclical

industries. Capex is still weak in several export markets in Europe. Nokia has

Confidence indicators remain at low levels

06 07 08 09 10 11 12-40-30-20

-100

1020

30

4050

-40-30-20

-100

1020

30

4050

Consumers

Services

Manufacturing

Net Bal.Net Bal.


Inflation and wage growth expected to decline

00 02 04 06 08 10 12

-2-101234567

-2-101234567

Wages and salaries

Consumer prices

%, 12 month changes%, 12 month changes



No

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Nordic Outlook

shut down telephone manufacturing production in Finland, which has had a

sizable impact on Finnish exports.

The outlook for Finland’s main export markets, Germany, Russia and

Sweden, is relatively stable. Exports to Russia have risen somewhat less than

expected but Russia might retake its position as the largest export destination

in 2013. Finnish competitiveness may have eroded compared to Germany or

some other countries but generally the Finnish export industries should still

be able to compete at reasonable terms. The strong SEK exchange rate has

helped Finnish companies compared to Sweden. Nevertheless, the fairly

widespread drive to preserve the strong manufacturing base in Finland calls

for low wage rises in the medium run. Given the large weight of cyclical

forest and metal industries and the poor manufacturing confidence, exports

are likely to perform poorly in Q1. Assuming a mild recovery in the euro area

in late 2013 and better global outlook next year, we expect exports to recover

by 1.2% in 2013 and rise further by 4.0% in 2014.

Finland had a current account surplus from 1994 to 2010 but fell into a small

deficit in 2011. The current account deficit deepened to 1.7% of GDP in

2012. We expect a current account deficit also in 2013-2014, driven by weak

exports and large net transfers. As a one-off item, Nokia’s decision not to pay

dividends improves the current account by nearly EUR600m in 2013

compared to 2012. The deficit is forecast to be around 1% of GDP, which

does not pose a major threat in the near future. An improvement in the global

business cycle could reverse the deficit back into a surplus fairly swiftly.

Investments continue to decline in 2013

Last year investments fell by 3%. The main factor behind the decline was

construction, which diminished by over 4%. The volume of investments in

machinery, equipment and transport equipment was nearly flat from the

previous year. Investments in the public sector held up at similar levels as in

2011 but private investments shrunk by 3.4%.

Weak business confidence, a persistent decline in building permits and

building starts as well as low manufacturing capex reported by business

surveys point to a continued fall in investments in the first half of 2013. We

forecast the decline for 2013 to be around 2%. After two poor years it is

expected that postponed investment needs will pick up, while low interest

rates still support construction and capex. Thus we expect investments to turn

to a healthy 3% growth in 2014.

Cooling-off period before new rise in housing market

The housing market was fairly stable in 2012. The number of sales of old

dwellings in blocks of flats and terraced houses fell by 3% according to the

preliminary information from the Central Federation of Finnish Real Estate

Agencies. Although the sales numbers fell marginally during the year, prices

held up and even increased by 1.7% compared to the previous year. The split

between Helsinki Metropolitan Area and the rest of the country continued as

prices in the capital rose by 2.4% and in the rest of the country only by 1.1%.

Preliminary figures from January tell that prices fell by 0.6% m/m. This was

somewhat surprising as our and the consensus expectation was for prices to

rise before a new tax hike on housing purchases that took effect in March.

Sales contracts made after February have to pay 2% transfer tax for the gross

Exports behind potential in global trade

99 00 01 02 03 04 05 06 07 08 09 10 1190

110

130

150

170

190

90

110

130

150

170

190

Finish exports

Global imports

1999 = 100, volume, s.a.


Manufacturing industries invest cautiously

76 80 84 88 92 96 00 04 08 1245

6

7

8

9

10

11

12

13

45

6

7

8

9

10

11

12

13Machinery and equipment investment per GDP, %



No

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Nordic Outlook

price of the house; previously the tax was 1.6% and only for the selling price

excluding debts owned through the housing company. The absolute tax

increase can be nearly EUR1,000 in a typical housing purchase transaction,

which can calm the market for a while after the tax hike.

Also housing loan growth nearly halted in January, which points to a sluggish

development in 2013. The reasons for this development can be found on the

demand side, as consumers’ intentions to purchase houses declined, as well

as on the supply side, as banks have started to change lending procedures to

meet new regulations that are expected to be implemented later in 2013.

These regulations include the Finnish FSA’s objective to bring loan-to-value

ratios down, even with a cap on loan ratios, similar to Sweden. As housing

loan stock growth has declined, banks have increased margins on typical

variable Euribor rate loans from 87bp at the end of 2011 to 136bp at the end

of 2012 according to the Bank of Finland.

Despite the abovementioned headwinds, there are also factors working in the

opposite direction. The debt-to-income ratio of Finnish households, albeit on

the rise, is still below that of other Nordic countries. Finnish households are

still able to amortise debt as the exceptionally low interest rate transmits

effectively in the Finnish housing market due to the high percentage of

variable rate loans. The supervisor’s vigilance should be seen as a

precautionary measure, which can be viewed as a stabilising factor in the

long term.

The volume of construction excluding renovations went down in 2012. The

decline was over 13% y/y in December. This limits the supply, which is

expected to continue as the permits granted for residential buildings went

down by 39.4% y/y in December. Construction confidence indicators remain

below normal levels and we expect caution to weigh on housing construction

well into 2013.

We expect nominal prices to rise only 0.5% in 2013, which would mean a

consecutive year when real prices in the housing market decline. Next year

we forecast housing prices to increase but only by 2.5%. Despite the past

year’s rise in prices we do not see a major risk of a bubble, because prices

have generally risen in line with earnings. A major decline in housing prices

could be initiated only by much higher long-term unemployment or surging

interest rates, which both look unlikely.

Debt level rising modestly despite austerity

The six-party coalition government increased taxes on alcohol, tobacco,

sugar, gasoline and motor vehicles last year. Some savings were also

implemented, ranging from forestation subsidies to defence expenditure. In

the beginning of 2013 the VAT increased by 1 percentage point. Initially the

new government aimed at EUR2.5bn in new annual tax revenue and savings.

In spring 2012 the coalition government agreed to additional net savings of

EUR2.7bn between 2013-2015 bringing the total to EUR5.2bn.

Approximately half of this is achieved by increasing the VAT, consumption

taxes and taxes on income. The other half comes from spending cuts from all

areas of the government. These measures will narrow the budget deficit

considerably and the main focus should now be the long-term solutions, such

as increasing the labour force participation rate via the increased retirement

age that takes into account future liability of the ageing population. There is,

Real prices do not signal a major housing bubble

78 81 84 87 90 93 96 99 02 05 08 117589

104118132147161175189204

7589

104118132147161175189204

Relative to average

household disposable income

Relative to rents

1978 = 100, blocks of flats and terraced

houses prices



No

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Nordic Outlook

however, a possibility of added austerity in 2014-2015 as the government has

committed to decrease the national debt level and to keep Finland’s triple-A

rating. These measures might be necessary if the coalition government cannot

agree on structural changes, especially on retirement age.

Finnish participation in the European bailouts shows in the national debt.

Last year the capital need for the ESM added EUR1.44bn to the general

government debt as Finland agreed to pay the whole amount in a lump sum in

exchange for the collateral agreements from Greece and Spain. The general

government debt reached 53% per GDP by the end of 2012. We forecast the

ratio to hover around 56% next year and by the end of 2014 to stabilise at

57% per GDP.

Public consumption increased by 0.8% in 2012. Tight budgets are likely to

keep growth in public spending in the coming years well below 1%. Room

for expansionary fiscal policy is tight, even if Finland is one of the least

indebted euro area countries. The remaining space for fiscal expansion is

reserved as a buffer against major shocks and future demographic changes.

Within the euro area, the Republic of Finland continues to enjoy one of the

lowest risk premiums compared to Germany. The triple-A rating might come

under review but the effects from a possible downgrade are likely to be

limited. We expect the fairly low level of public debt, the excellent track

record and policy decisions to continue to keep Finnish risk premium low,

interest rates low and credit ratings high.

Employment decent, outlook wary

Until now the labour market has remained surprisingly strong despite the

weak growth figures. Unemployment rate has stayed around 8%. Youth

unemployment rate has declined but is still high at 20%. Layoffs have

increased and according to surveys firms’ intentions of hiring new workers

are low in almost all industries. In January the number of unemployed was

228,000, which was 25,000 more than a year earlier. The seasonally adjusted

unemployment rate rose to 8.0%. The labour force participation rate was

66.9%, which was unchanged from a year ago. New vacancies at

employment offices stood at 55,000 in October, which is 5,000 positions less

than January 2012. The ageing trend will limit the supply of labour in the

coming years.

We forecast the unemployment rate to increase until the end of 2013 as the

economic downturn weighs on the labour market. The average

unemployment rate is expected to rise to 8.3% in 2013 before economic

growth and the ageing trend bring it back to 8% in 2014. The number of

employed persons is likely to continue to fall slightly in early 2013, while the

labour supply stops growing, thus keeping the unemployment rate in control.

Lost manufacturing jobs are largely replaced by jobs in services sectors. The

natural rate of unemployment is likely to be around 6-7% given that

unemployment rates are stubbornly high in some rural parts of eastern

Finland and Lapland.

Budget balance and current account negative

99 00 01 02 03 04 05 06 07 08 09 10 11-8-6

-4

-2

0

2

4

6

8

10

-8-6

-4

-2

0

2

4

6

8

10

Central gov. revenue balance

Current account

% of GDP, mov. ann. totals


Unemployment rate to rise above 8%

90 92 94 96 98 00 02 04 06 08 10 120

2

4

6

8

10

12

14

16

18

0

2

4

6

8

10

12

14

16

18

Finland

Euro zone

%%



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Finland: Forecast at a glance

Source: Danske Bank * Forecasts: Sampo Bank/Economists

National accounts 2010 2011 2012 2013 2014

GDP 3.3 2.8 -0.2 0.3 2.0Imports 6.9 6.1 -3.7 0.8 2.5Exports 7.5 2.9 -1.4 1.2 4.0Consumption 2.1 1.8 1.4 0.8 0.9- Private 3.3 2.3 1.6 0.8 1.2- Public -0.3 0.4 0.8 0.5 0.2Investments 1.9 7.1 -2.9 -2.0 3.0

Key Performance Indicators 2010 2011 2012 2013 2014

Unemployment rate, % 8.4 7.8 7.7 8.3 8.0Earnings, % 2.6 2.7 3.5 2.6 2.2Inflation, % 1.2 3.4 2.8 2.0 2.0Current account, Bn, EUR 2.7 -3.1 -3.3 -2.0 -1.5Current account/GDP, % 1.5 -1.6 -1.7 -1.0 -0.7Public deficit/GDP, % -2.5 -0.8 -1.9 -1.5 -1.0Public debt/GDP, % 48.6 49.0 53.0 56.0 57.0

Financial figures + 3 mths + 6 mths + 12 mths

Repo rate, % 0.75 0.75 0.75 0.752 year swap rate 0.46 0.60 0.70 0.8510 year swap rate 1.68 1.80 2.10 2.35EUR/USD 1.30 1.36 1.38 1.34

19/03/2013

Volume, y-o-y %


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Global overview

US take-off to drive global recovery

We are gaining confidence that the global economy is now on a

path to a sustainable recovery that will gain pace in coming years.

A turn in US housing, an easing of the euro crisis and looser policy

in China are among the main forces behind the improvement we

see in the global economy.

We expect 2013 to be the year in which the US economy really

takes off.

The euro area will be in dire straits for some time but should see a

return to slow - but positive - growth soon.

In China a two-year slowdown has come to an end. However, the

economy is recovering to a lower potential growth rate than

before the slowdown. Japan will see a strong rebound in 2013 on

the back of ‘Abenomics’ but risks loom again in 2014.

Monetary policy is expected to stay loose for a very long time. The

Fed is not expected to scale back asset purchases until Q4 13. And

both Bank of Japan and Bank of England are seen stepping up

asset purchases this year. We look for the ECB to keep rates

unchanged for a very long time but not cut rates further.

Global economy on path to sustainable recovery? Yes!

The global economy has been in a slowdown for two and a half years now

but there are finally signs that a path towards a sustainable recovery has

started.

The very slow global growth in recent years can be mainly attributed to three

factors:

1. A severe hangover following the Great Housing Bubble;

2. Periods of intense financial stress due to the euro crisis; and

3. Chinese policy tightening to stem a housing bubble and fight inflation.

The recipe for a sustainable global recovery is to be found in improvement on

these three fronts – and we are indeed seeing this now.

First, we see many signs that the world’s largest economy has progressed

significantly from the hangover following the Great Housing Bubble and we

believe this will be an important driver of a global recovery in the years

ahead.

Second, there are clear indications that the periods of intense financial stress

due to the euro crisis could be behind us. The stress has given significant

uncertainty for consumers and companies globally and restrained private

spending. This has added to the significant drag already coming from a

decline in public spending in many countries. The back-stop from the ECB

has so far worked to significantly improve sentiment in financial markets and

Global GDP forecasts

Source: Danske Bank Markets, Bloomberg, OECD, IMF

China’s slowdown has come to an end – but

potential growth is lower now


G3 on path to recovery


% y/yD anske

B ank

C o nsen

sus OEC D IM F

D anske

B ank

C o ns

ensus OEC D IM F

USA 1.9 1.9 2.0 2.0 2.8 2.7 2.8 3.0

Euro area -0.4 -0.2 -0.1 -0.2 1.2 1.1 1.3 1.0

Japan 1.6 1.2 0.7 1.2 1.1 1.3 0.8 0.7

China 8.4 8.1 8.5 8.2 8.2 8.0 8.9 8.5

Global 3.6 3.5 3.5 4.0 3.9 4.1

2013 2014

10 11 12 13 14

4

5

6

7

8

9

10

11

12

4

5

6

7

8

9

10

11

12

% y/y

%%GDP

% q/q SAForecast

04 06 08 10 12 14

5

15

25

35

45

55

65

75

-8

-6

-4

-2

1

3

5% y/y Index

<< G3 GDP growth

G3 PMI new orders >>

Note: G3 is US, Euro area and Japan


No

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Nordic Outlook

to avoid the euro crisis from flaring up again. The fairly calm effect (at least

so far) following the Italian election is an indication of this.

Finally, China is seeing an end to a two-year slowdown which has worked as

a major drag on the global economy. China is the second-largest economy in

the world but number one when it comes to the contribution to global growth.

In addition to the above factors, global central banks are stepping quite hard

on the accelerator – and some are expected to step even harder this year

(Bank of Japan and Bank of England).

Overall, we are gaining confidence that the global economy is now on a path

to a sustainable recovery that will gain pace in coming years as more of the

hangover from the financial crisis will ease.

US ahead in the healing after the Great Housing Bubble

The US is clearly ahead in the healing process while there is still more pain

left in the euro area. US housing has turned a corner whereas the euro area

has further adjustments left before a recovery can take place. French house

prices, for example, have yet to correct from overvalued levels. Banks are

also in much better shape in the US which stands in sharp contrast to the euro

area where lending standards continue to be tightened every quarter. The US

is also ahead when it comes to household deleveraging giving a stronger base

for improvement in household spending.

The healing that is needed in the public sector still has some way to go in

both the US and the euro area. The euro area on average has reduced the

budget deficit to a lower level than the US and thus could be said to be ahead

on this point. But as the US has much higher nominal growth in the economy

it is able to stabilise the debt level with a higher budget deficit – all else

equal.

In 2014 we expect the headwind from tighter fiscal policy in both the US and

the euro area to ease as the pace of reducing the public budget deficits can be

allowed to slow down.

Although the US is leading the way out of the crisis, the hangover will also

come to an end in Europe at some point. This will pave way for ‘a new

beginning’ with growth rates recovering from the current very low levels.

Pent-up demand from investment and consumption at that point will be

released and structural reforms will have a positive effect on growth.

However, history suggests it can take quite some time yet before the euro

area reaches that point as the need for further adjustments is still big.

Germany in the 1990’s and 2000’s is an example of how long it can take to

rise from the ashes. Until then we are likely to see very slow growth and a

further rise in unemployment.

During the period of further domestic adjustment any growth in the euro area

will mostly stem from exports to the rest of the world. The take-off in the US

and higher growth in Emerging Markets will lift export growth and to some

extent also investment spending.

China recovering – but potential growth is lower

The picture in China is one of recovery from a two-year slowdown. Although

uneven, data is generally supporting a gradual improvement in growth. The

Status on healing after the Great Housing Bubble –

US ahead, euro is not there yet

Source: Danske Bank Markets

US house price adjustment has come far

Source: MacroBond

Credit flowing in US, still weak in Europe


Housing recovery

Flow of credit

Household deleveraging

Fiscal adjustment

US -

Euro area - - - -

06 07 08 09 10 11 12

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0% y/y % y/y

UK credit to

private sector

US credit to consumers and businesses

Euro credit to private sector

Data break


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slowdown in China was triggered by fading stimulus after the boost in 2009

and policy tightening in response to an overheating housing market and high

inflation. The weak Chinese economy also suffered from a sharp decline in

exports to Europe which accounts for 20% of total Chinese exports.

However, renewed policy stimulus in 2012 has given a lift to the domestic

economy. Housing has recovered and infrastructure investment has also seen

a lift. Exports are also doing better.

A challenge for China continues to be a rebalancing of the economy away

from investments and exports towards more consumer-driven growth. The

recent pick-up in growth is again investment and credit driven while private

consumption has yet to show clear signs of recovery.

We expect the Chinese economy to improve further in coming quarters with

growth reaching just above 9% in mid-2013. During the second half of the

year activity is likely to taper off again, though, as policy stimulus fades and

tighter regulation in the housing market will keep a lid on activity in this

sector.

Next year the Chinese economy is expected to grow 8.2% which we see as

close to China’s potential growth rate. This rate has come down from the

10% level prior to the financial crisis as the rebalancing of the economy

means more weight to the service sector where productivity growth is lower

than in the industrial sector. The early low-hanging fruits from new

technology have also been taken. Gains in productivity from new investments

are therefore also going down.

Japan makes a difference in 2013 – risks in 2014

For once Japan is expected to make a difference for the global economy in

2013. After the economy shrank by more than 2% annualised in the second

half of last year it is expected to rise by 3.5% annualised in the first half of

this year. This will give a direct lift to global growth of 0.4 percentage points.

Japan is recovering in response to a massive stimulus programme – popularly

called ‘Abenomics’ after the new prime minister, Shinzo Abe – involving a

significant easing of both fiscal and monetary policy as well as an increase of

the inflation target to 2% from 1%.

The Japanese experiment is a very new way for Japan. And it will be

interesting to see if it succeeds. If the global economy continues to recover

there is a good chance that Japan can succeed with its kick-start and get a

pick-up in private spending strong enough to compensate for the subsequent

decline in public spending once the stimulus measures fade again in 2014.

Not least because it is expected to take place in a more positive global

environment with the US recovering and Europe getting further in healing

process next year. There is a clear risk, though, that the Japanese economy

will tumble again in 2014 if the fiscal contraction becomes too big and the

global economy loses steam.

Euro crisis still the main risk to the global economy

The main risk is still a renewed flare-up of the euro crisis which could be

triggered by a severe slowdown in France or chaos in Italy or Spain. But the

probability of such a development has been reduced by the ECB’s back-stop

Signs of pick-up in Chinese imports after two years

of stagnation


Strong turn in Japanese economy in 2013


Severe recession in euro area domestic economy


07 08 09 10 11 12

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1Bn CNY

China imports, smoothed

12 13

-0.20

-0.15

-0.10

-0.05

0.00

0.05

0.10

0.15

0.20

0.25

0.30

-4

-3

-2

-1

0

1

2

3

4

5

6 % q/q AR% q/q, % points

ForecastDirect contr. to

global growth >>

<< Japan GDP growth

96 98 00 02 04 06 08 10 12

-7.5

-5.0

-2.5

0.0

2.5

5.0

7.5

-7.5

-5.0

-2.5

0.0

2.5

5.0

7.5% y/y

Euro private domestic demand

US private domestic demand% y/y


No

rdic O

utlo

ok

Nordic Outlook

and also the fact that the fiscal situation has improved in the euro area

following years of consolidation.

Central banks keeping foot on the accelerator

The outlook for monetary policy is one of continued very easy policy among

the developed economies. We expect the Fed to continue asset purchases of

USD85bn until Q4 13. After that we expect asset purchases to be scaled

down until a complete end in early 2015. Further stimulus is expected from

Bank of Japan and Bank of England where incoming new governors are

signalling a more aggressive approach to spurring growth. For the ECB, the

bar for further easing seems quite high and we do not expect any further

stimulus from this side. However, rate hikes are not on the horizon for a very

long time. We do not expect the first hike until the first half of 2015.

In China a renewed rise in property prices is being watched closely by the

People’s Bank of China. We now expect a first rate hike to come already in

Q4 13 to stem the pick-up in house prices.


No

rdic O

utlo

ok

Nordic Outlook

Economic forecast

Source: OECD and Danske Bank. 1) % y/y. 2) % contribution to GDP growth. 3) % of labour force. 4) % of GDP.

Macro forecast, Scandinavia

Denmark 2012 -0,6 0,5 0,5 1,2 -0,5 1,1 2,7 2,4 6,1 -4,0 42,0 5,92013 0,4 0,4 1,2 0,3 0,0 0,1 0,0 1,3 6,0 -1,4 40,7 4,12014 1,5 1,1 0,2 -0,5 0,0 3,2 1,6 1,9 6,0 -0,3 38,9 4,7

Sweden 2012 0,8 1,5 0,8 3,4 -1,1 0,7 -0,1 0,9 8,0 -0,6 37,7 7,02013 1,7 2,4 0,8 2,5 0,2 1,5 2,5 0,3 8,0 -1,0 37,6 6,92014 2,0 2,6 0,6 7,7 0,0 4,9 7,6 1,7 7,8 -0,8 37,5 6,1

Norway 2012 3,5 2,9 2,1 8,1 2,2 3,3 0,8 3,2 - - -2013 2,8 3,0 1,6 5,5 0,1 -1,6 4,2 1,6 3,1 - - -2014 3,5 3,6 2,0 4,6 0,0 1,4 3,8 2,0 3,0 - - -

Macro forecast, Euroland

Euroland 2012 -0,5 -1,2 -0,1 -3,9 -0,7 2,9 -0,9 2,5 11,4 -3,5 93,1 1,42013 -0,4 -0,7 -0,4 -4,5 -0,1 2,0 -0,2 1,7 12,1 -3,1 95,5 2,42014 1,2 0,1 -0,2 1,0 0,1 4,4 2,8 1,6 12,2 -2,9 95,8 2,5

Germany 2012 0,9 0,6 1,4 -4,9 0,0 4,3 2,2 2,0 6,9 0,1 82,4 6,32013 0,5 0,5 0,8 -1,2 0,0 2,6 2,5 1,8 6,7 -0,2 81,1 6,02014 2,3 1,4 0,9 4,9 0,0 4,8 4,5 2,0 6,5 0,0 79,0 5,6

France 2012 0,0 0,0 1,4 0,0 1,4 2,3 -0,3 2,1 10,2 -4,7 90,8 -1,92013 -0,1 0,2 0,6 -1,0 -0,4 1,8 1,1 1,7 10,4 -4,0 92,8 -1,62014 0,8 1,1 0,0 1,4 0,0 4,4 4,3 1,5 10,6 -4,2 94,2 -1,8

Italy 2012 -2,2 -4,2 -1,0 -9,2 -0,4 1,9 -7,4 3,0 10,6 -2,4 124,2 -0,72013 -1,5 -1,9 -0,5 -4,7 0,0 3,0 1,6 2,0 11,8 -2,4 128,6 0,62014 1,0 1,1 -0,4 2,0 0,0 4,0 4,1 1,7 11,5 -2,3 128,1 0,8

Spain 2012 -1,4 -2,2 -3,7 -8,7 0,5 3,1 -5,0 1,9 24,9 -6,7 88,4 -1,92013 -1,4 -2,8 -3,6 -7,8 0,0 5,8 -0,8 1,7 26,4 -5,5 96,0 1,02014 -0,6 -0,7 -2,0 -2,0 0,0 4,8 3,5 1,0 26,8 -5,2 102,0 2,5

Finland 2012 -0,2 1,6 0,8 -2,9 - -1,4 -3,7 2,8 7,7 -1,9 53,0 -1,72013 0,3 0,8 0,5 -2,0 - 1,2 0,8 2,0 8,3 -1,5 56,0 -1,02014 2,0 1,2 0,2 3,0 - 4,0 2,5 2,0 8,0 -1,0 57,0 -0,7

Macro forecast, Global

USA 2012 2,2 1,9 -1,7 8,5 0,1 3,3 2,4 2,1 8,1 -7,0 100,0 -3,02013 1,9 1,7 -1,5 8,4 0,0 2,7 3,2 1,6 7,6 -5,3 101,8 -3,12014 2,8 2,4 -0,9 9,6 0,1 7,4 7,5 1,7 6,8 -3,7 100,9 -3,2

Japan 2012 2,0 2,3 2,7 4,2 0,0 -0,2 5,3 -0,1 4,4 -7,9 229,7 1,92013 1,6 1,0 1,6 4,1 0,0 -1,7 0,7 0,2 4,2 9,3 238,6 1,52014 1,1 0,1 1,0 0,7 0,0 7,6 3,2 2,1 4,1 -8,4 245,0 2,0

China 2012 7,8 - - - - - - 2,7 4,3 -1,3 22,2 2,32013 8,4 - - - - - - 2,7 4,3 -1,9 19,6 2,92014 8,2 - - - - - - 3,1 4,1 -1,7 17,2 3,4

UK 2012 0,0 0,8 2,7 -0,4 -0,3 -0,1 2,3 2,8 8,0 -5,2 90,5 -3,52013 1,1 1,0 -0,1 0,7 0,2 3,5 2,7 2,7 8,1 -6,2 93,5 -2,92014 1,7 1,6 -1,1 4,8 0,0 4,5 3,4 2,6 8,2 -5,2 96,2 -2,9

Current

acc.4

GDP 1

Private

cons.1

Public

cons.1

Fixed

inv.1

Stock

build.2

Ex-

ports1

Im-

ports1

Infla-

tion1

Unem-

ploym.3

Public

budget4

Public

debt4

Year

Year GDP 1

Private

cons.1

Public

cons.1

Fixed

inv.1

Stock

build.2

Ex-

ports1

Im-

ports1

Infla-

tion1

Unem-

ploym.3

Public

budget4

Current

acc.4

Public

debt4

Current

acc.4

Im-

ports1

Public

debt4

Public

budget4

Ex-

ports1

Infla-

tion1

Unem-

ploym.3

Year GDP 1

Private

cons.1

Public

cons.1

Fixed

inv.1

Stock

build.2


No

rdic O

utlo

ok

Nordic Outlook

Financial forecast

Source: Danske Bank

Bond and money markets

Currencyvs USD

Currencyvs DKK

USD 20-mar - 577,3

+3m - 549

+6m - 541+12m - 557

EUR 20-mar 129,1 745,3

+3m 136 746,0

+6m 138 746,0+12m 134 746,0

JPY 20-mar 95,4 6,05

+3m 95 5,78

+6m 96 5,65+12m 100 5,57

GBP 20-mar 151,2 872,8

+3m 155 848

+6m 153 829+12m 152 848

CHF 20-mar 94,6 610,1

+3m 93 592

+6m 91 592+12m 92 607

DKK 20-mar 577,3 -

+3m 549 -

+6m 541 -+12m 557 -

SEK 20-mar 645,2 89,5

+3m 610 89,9

+6m 601 89,9+12m 612 91,0

NOK 20-mar 583,1 99,0

+3m 533 102,9

+6m 522 103,6+12m 534 104,3

Equity markets

Regional

Price trend12 mth.

Regional recommen-dations

USA Still policy fears but solid private demand 10%-15% Underweight

Emerging markets (USD) Modest growth recovery in China 10%-15% Neutral

Europe (ex. Nordics) (EUR) Euro crisis abates 10%-15% OverweightNordics Strong macro balances 10%-15% Neutral

Commodities

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014

NYMEX WTI 96 103 103 102 102 102 101 100 101 101

ICE Brent 116 118 115 112 110 108 106 104 115 107

Copper 8.200 8.400 8.450 8.500 8.525 8.550 8.575 8.600 8.388 8.563

Zinc 2.100 2.125 2.135 2.145 2.150 2.155 2.160 2.165 2.126 2.158

Nickel 18.000 18.500 18.200 17.900 17.700 17.500 17.300 17.100 18.150 17.400

Aluminium 2.100 2.150 2.125 2.100 2.075 2.050 2.025 2.000 2.119 2.038

Gold 1.700 1.750 1.725 1.700 1.675 1.650 1.625 1.600 1.719 1.638

Matif Mill Wheat 250 255 260 255 250 252 254 256 255 253

CBOT Wheat 798 826 833 807 792 798 804 811 816 801

CBOT Corn 725 750 775 765 755 760 765 770 754 763CBOT Soybeans 1.450 1.500 1.525 1.505 1.485 1.500 1.515 1.530 1.495 1.508

Medium 0 to +5%

1.416

730

1,69

2,602,65

3,22

3,25

3,30

2,37

2,50

1,86

2,60

1,11

1,05

1,201,35

3,40

2,252,50

1,95

0,80

0,901,05

1,97

2,10

2,40

20142013

2,15

2,04

2,352,65

1,80

2,102,35

93

16.535

7.530

1.923

1.610

242

108

1.937

731

20-mar

0 to +5%

0 to +5%

Medium

Medium

2,02

Currencyvs EUR

2-yr swap yield

Risk profile3 mth.

Medium 0 to +5%

Price trend3 mth.

0,42

0,49

0,23

0,60

0,10

0,67

0,60

0,700,85

0,45

85,4

122,2

745,3

88,0

90,088,0

126

126123

833,0

752,8

715

830

830820

725

129,1

-

-

--

123,2

746

746746

0,25

0,250,25

136

138134

129

132134

0,72

0,15

0,150,20

1,43

1,70

0,550,70

0,65

0,700,80

2,10

1,90

0,80

0,901,050,50

1,32

1,27

1,88

720

1,82

1,85

2,00

2,00

1,80

0,05

0,20

0,20

0,20

0,050,05

0,45

0,40

0,28

0,21

0,16

0,51

0,02

0,35

0,400,45

0,28

0,30

1,50

1,00

1,001,25

1,50

1,50

0,000,00

0,75

0,50

1,57

1,00

0,10

0,28

2,05

0,75

0,10

0,50

0,00

0,30

0,35

0,50

0,500,50

0,75

0,100,10

0,50

10-yr swap yield

1,25

0,30

0,400,50

3m interest rate

0,50

Average

Key int.rate

0,25

0,25

0,250,25

1,75

0,00

0,75


No

rdic O

utlo

ok

Nordic Outlook

Disclosure This research report has been prepared by Danske Bank Markets, a division of Danske Bank. Danske Bank is under supervision by the Danish Financial Supervisory

Authority.

Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of high quality research based on research objectivity and independence.

These procedures are documented in the Danske Bank Research Policy. Employees within the Danske Bank Research Departments have been instructed that any request that

might impair the objectivity and independence of research shall be referred to Research Management and to the Compliance Officer. Danske Bank Research departments are

organised independently from and do not report to other Danske Bank business areas. Research analysts are remunerated in part based on the over-all profitability of Danske

Bank, which includes investment banking revenues, but do not receive bonuses or other remuneration linked to specific corporate finance or debt capital transactions.

Danske Bank research reports are prepared in accordance with the Danish Society of Investment Professionals’ Ethical rules and the Recommendations of the Danish

Securities Dealers Association.

Financial models and/or methodology used in this research report

Calculations and presentations in this research report are based on standard econometric tools and methodology as well as publicly available statistics for each individual

security, issuer and/or country. Documentation can be obtained from the authors upon request.

Risk warning

Major risks connected with recommendations or opinions in this research report, including as sensitivity analysis of relevant assumptions, are stated throughout the text.

Expected updates

Nordic Outlook is a quarterly forecast, but new statistical data may give rise to changes in our views on individual economies.

First date of publication

Please see the front page of this research report.

General disclaimer This research has been prepared by Danske Bank Markets (a division of Danske Bank A/S). It is provided for informational purposes only. It does not constitute or form part

of, and shall under no circumstances be considered as, an offer to sell or a solicitation of an offer to purchase or sell any relevant financial instruments (i.e. financial

instruments mentioned herein or other financial instruments of any issuer mentioned herein and/or options, warrants, rights or other interests with respect to any such

financial instruments) ("Relevant Financial Instruments").

The research report has been prepared independently and solely on the basis of publicly available information which Danske Bank considers to be reliable. Whilst reasonable

care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness, and Danske Bank, its affiliates and

subsidiaries accept no liability whatsoever for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this research report.

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N o r way

F r a n k J u l l u m+ 4 7 8 5 4 0 6 5 4 0f j u @ f o k u s . n o

B e r n t C h r i s t i a n B r u n+ 4 7 2 3 1 3 9 1 9 0b b r u @ d a n s k e b a n k . n o

F i N l a N d

P a s i P e t te r i K u o p p a m ä k i+ 3 5 8 ( 0 ) 1 0 5 4 6 7 7 1 5p a s i . k u o p p a m a k i @ d a n s k e b a n k . co m

i N t e r N at i o N a l M a c r o

C h i e f A n a l y s t & H e a d of A l l a n v o n M e h r e n + 4 5 4 5 1 2 8 0 5 5a l v o @ d a n s k e b a n k . d k

S i g n e P. R o e d - F r e d e r i k s e n+ 4 5 4 5 1 2 8 2 2 9s r o e @ d a n s k e b a n k . d k

F r a n k Ø l a n d H a n s e n+ 4 5 4 5 1 2 8 5 2 6 f r a n h @ d a n s k e b a n k . d k

F l e m m i n g J e g b j æ r g N i e l s e n + 4 5 4 5 1 2 8 5 3 5f l e m m @ d a n s k e b a n k . d k

P e r n i l l e B o m h o l d t N i e l s e n+ 4 5 4 5 1 2 8 4 9 8p e r n i @ d a n s k e b a n k . d k

F i x e d i N c o M e r e s e a r c h

C h i e f A n a l y s t & H e a d of T h o m a s T h ø g e r s e n G r ø n k j æ r + 4 5 4 5 1 2 8 5 0 2th g r @ d a n s k e b a n k . d k

J e n s P e te r S ø r e n s e n+ 4 5 4 5 1 2 8 5 1 7 j e n s s r @ d a n s k e b a n k . d k

C h r i s t i n a E . Fa l c h + 4 5 4 5 1 2 7 1 5 2c h f a @ d a n s k e b a n k . d k

S ø r e n S ko v H a n s e n + 4 5 4 5 1 2 8 4 3 0s r h a @ d a n s k e b a n k . d k

J a n We b e r Ø s te r g a a r d+ 4 5 4 5 1 3 0 7 8 9j a s t @ d a n s k e b a n k . d k

S v e r r e H o l b e k + 4 5 4 5 1 4 8 8 8 2h o l b @ d a n s k e b a n k . d k

A n d e r s Ve s te r g å r d F i s c h e r+ 4 5 4 5 1 3 6 6 4 1a f i s @ d a n s k e b a n k . d k

A n d e r s M ø l l e r L u m h o l t z+ 4 5 4 5 1 2 8 4 9 8a n d j r g @ d a n s k e b a n k . d k

r at e s , F x & c o M M o d i t i e s

s t r at e g y

C h i e f A n a l y s t & H e a d of A r n e L o h m a n n R a s m u s s e n + 4 5 4 5 1 2 8 5 3 2a r r @ d a n s k e b a n k . d k

K a s p e r K i r k e g a a r d + 4 5 4 5 1 3 7 0 1 8k a k i @ d a n s k e b a n k . d k

C h r i s t i n K y r m e Tu x e n + 4 5 4 5 1 3 7 8 6 7tu x @ d a n s k e b a n k . d k

P e te r P o s s i n g A n d e r s e n + 4 5 4 5 1 3 7 0 1 9p a @ d a n s k e b a n k . d k

L a r s Tr a n b e r g R a s m u s s e n+ 4 5 4 5 1 2 8 5 3 4 l a r a s @ d a n s k e b a n k . d k

M o r te n T h r a n e H e l t+ 4 5 4 5 1 4 8 8 8 2m o h e l @ d a n s k e b a n k . d k

c r e d i t r e s e a r c h

C h i e f A n a l y s t & H e a d of T h o m a s M a r t i n H o v a r d+ 4 5 4 5 1 2 8 5 0 5 h o v a @ d a n s k e b a n k . d k

H e n r i k A r n t + 4 5 4 5 1 2 8 5 0 4h e a n d @ d a n s k e b a n k . d k

L o u i s L a n d e m a n+ 4 6 8 5 6 8 8 0 5 2 4l l a n @ d a n s k e b a n k . s e

J a ko b M a g n u s s e n + 4 5 4 5 1 2 8 5 0 3j a k j a @ d a n s k e b a n k . d k

A s b j ø r n P u r u p A n d e r s e n+ 4 5 4 5 1 4 8 8 8 6a p u @ d a n s k e b a n k . d k

M a d s R o s e n d a l+ 4 5 4 5 1 4 8 8 7 9m a d r o @ d a n s k e b a n k . d k

G a b r i e l B e r g i n+ 4 6 ( 0 ) 8 - 5 6 8 8 0 6g a b e @ d a n s k e b a n k . d k

B r i a n B ø r s t i n g+ 4 5 4 5 1 2 8 5 1 9b r b r @ d a n s k e b a n k . d k

Å s e H a a g e n s e n h a @ d a n s k e b a n k . co m + 4 7 2 2 8 6 1 3 2 2

D a n s k e B a n k , D a n s k e R e s e a r c h , H o l m e n s K a n a l 2 - 1 2 , D K - 1 0 9 2 C o p e n h a g e n K . P h o n e + 4 5 4 5 1 2 0 0 0 0 w w w. d a n s k e r e s e a r c h . co m

d e N M a r k

S te e n B o c i a n+ 4 5 4 5 1 2 8 5 3 1s tb o @ d a n s k e b a n k . d k

L a s O l s e n + 4 5 4 5 1 2 8 5 3 6l a s o @ d a n s k e b a n k . d k

J e n s N æ r v i g P e d e r s e n + 4 5 4 5 1 2 8 0 6 1j e n p e @ d a n s k e b a n k . d k

s w e d e N

C h i e f A n a l y s t & H e a d of M i c h a e l B o s tr ö m+ 4 6 8 5 6 8 8 0 5 8 7m b o s @ c o n s e n s u s . s e

R o g e r J o s e f s s o n+ 4 6 8 5 6 8 8 0 5 5 8 r j o s @ c o n s e n s u s . s e

M i c h a e l G r a h n + 4 6 8 5 6 8 8 0 7 0 0m i k a @ c o n s e n s u s . s e

C a r l M i l to n+ 4 6 8 5 6 8 8 0 5 9 8c a r m i @ c o n s e n s u s . s e

M a r c u s S ö d e r b e r g+ 4 6 8 5 6 8 8 0 5 6 4m a r s d @ c o n s e n s u s . s e

S te f a n M e l l i n+ 4 6 8 5 6 8 8 0 5 9 2m e l l @ c o n s e n s u s . s e

Global Danske ReseaRch

H e a d o f G l o b a l d a n s k e R e s e a R c H T h o m a s T h ø g e r s e n G r ø n k j æ r + 4 5 4 5 1 2 8 5 0 2th g r @ d a n s k e b a n k . d k

c H i e f e c o n o m i s t at d a n s k e b a n k

S te e n B o c i a n+ 4 5 4 5 1 2 8 5 3 1s tb o @ d a n s k e b a n k . d k

e M e r g i N g M a r k e t s

C h i e f A n a l y s t & H e a d of L a r s C h r i s te n s e n+ 4 5 4 5 1 2 8 5 3 0l a r c h @ d a n s k e b a n k . d k

S ta n i s l a v a P r a d o v a + 4 5 4 5 1 2 8 0 7 1s p r a @ d a n s k e b a n k . d k

Vi o l e ta K l y v i e n eS e n i o r B a l t i c A n a l y s t+ 3 7 0 6 1 1 2 4 3 5 4v k l y @ d a n s k e b a n k . d k

S e n i o r E co n o m i s tS a n n a K u r r o n e n ( o n l e a v e )+ 3 5 8 1 0 5 4 6 7 5 7 3k u r r @ d a n s k e b a n k . co m

V l a d i m i r M i k l a s h e v s k y + 3 5 8 ( 0 ) 1 0 5 4 6 7 5 2 2v l m i @ d a n s k e b a n k . co m

Documents

Economic and financial trends - Danske Bank · Sweden Dancing to a different tune 11 Forecast at a glance 19 Norway Slower growth 20 Forecast at a glance 24 Finland Recovery drifting