Economic and financial trends - Danske Bank · monetary policy is not quite so expansive – though the steep decline in oil ... extraordinarily low interest rates have any consequences

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Investment Research

25 March 2015

Nordic OutlookEconomic and financial trends

� Denmark: Moderate growth despite very low rates - Danmarks Nationalbank lowered policy rates to a record low in defence of the peg

� Sweden: Riksbank goes to currency war? - Keep an eye on developments in SEK

� Norway: Noticeable growth slowdown - The decline in oil investment is beginning to be noticed in the economy

� Finland: Elections ahead - Struggling with both cyclical and structural problems

2 | 25 March 2015 www.danskeresearch.com

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Analysts

Editorial deadline 24 March 2015 Investment Research

Editor-in-Chief:

Steen Bocian

Chief Economist

+ 45 45 12 85 31

[email protected]

Macro economics:

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

Mikael Olai Milhøj Denmark +45 45 12 76 07 [email protected]

Mikkel Rud Bjørndal Denmark +45 45 12 81 57 [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)10 546 7715 [email protected]

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

Statistical sources: Datastream, Macrobond Financial, 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 36 of this report.

http://www.danskebank.dk/analyse

http://www.danskebank.dk/analyse


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Contents

Nordic Outlook At a glance 4

Denmark Moderate growth despite very low rates 7

Forecast at a glance 13

Sweden Riksbank goes to currency war? 14


Norway Noticeable growth slowdown 20


Finland Elections ahead 25


Global overview Consumers driving global recovery 33

Economic forecast 34

Financial forecast 35

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

the Nordic countries. The semi-annual publication The Big Picture sets out our global economic outlook.

http://danskeresearch.danskebank.com/link/GlobalScenarios/$file/GlobalScenarios.pdf


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Nordic Outlook

At a glance

Experimental monetary policies increase risk of

macroeconomic imbalances

Despite falling oil prices and central banks being in uncharted waters, the

Nordic economies still look strong, with a solid growth outlook for coming

years. However, the level of uncertainty is significant. We do not yet know

the full consequences of extremely low monetary policy rates and

quantitative easing (QE) in Sweden, Denmark and Finland. Norwegian

monetary policy is not quite so expansive – though the steep decline in oil

prices in H2 14 increases the risk of a marked slowdown in Norway.

Extremely low interest rates and house prices having risen sharply –

particularly in Norway and Sweden – pose a considerable risk of

macroeconomic imbalances building. We do not expect to see the

consequences of any potential bubble during the forecast period but there is a

degree of uncertainty when looking further ahead to 2017 and 2018.

Finland and Denmark, the Nordic countries that have faced the biggest

challenges in recent years, appear to be on the right track. In Denmark, we

expect growth to reach almost 1.75% this year, rising to just over 2% in

2016. Finland is experiencing significant headwinds from the crisis in Russia

and still weak domestic demand but we expect to see growth of 0.5% this

year and 1.5% next year, helped along by a general pickup in Europe. In

contrast, Norwegian GDP growth is under pressure from falling oil prices,

though we still expect growth of 1.7% this year and 2.2% next year, which is

not at all low in a European context. Last, but not least, Sweden appears to be

on a more positive course than we previously estimated. We now expect

GDP growth here of 2.1% in both 2015 and 2016.

Record-low interest rates grab the headlines

The all-dominating economic and financial theme in the Nordic region is the

consequences of the extremely low interest rates. Rates are negative in

Denmark, Finland and Sweden, while Norwegian rates remain in positive

territory, though we expect policy rates to be cut again here in Q2 this year.

Low rates do not significantly change our growth forecast for

Denmark

The lowest interest rates in the world are currently to be found in Switzerland

and Denmark, which both have a key policy rate of -0.75%, although

Denmark has not had such extremely low rates for very long. At the start of

the year, the central bank’s key lending rate was 0.2% and the certificates of

deposit rate -0.05%. However, QE in Europe and a shift in monetary policy

in Switzerland put pressure on the EUR/DKK peg, prompting the Danish

central bank Danmarks Nationalbank (DN) to react. The EUR/DKK peg is

such a cornerstone of Danish economic policy that it is in reality non-

negotiable. DN consequently intervened heavily in FX markets and cut its

lending rate to 0.05% and its certificates of deposit rate to -0.75% – its lowest

interest rate ever. While the acute appreciation pressures on the DKK have

eased somewhat since mid-February, we do not expect DN to have the option

of normalising rates within the coming year.

Nordic GDP growth still looking strong

Source: National statistics offices, Danske Bank Markets

Low inflation – except in Norway

Source: National statistics offices, Danske Bank Markets

Extremely low policy rates

Source: National central banks

Large increase in Danish FX reserves

Source: Danish central bank, Statistics Denmark


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Further QE in Europe and Denmark’s very significant current account surplus

add up to structural appreciation pressure on the DKK. This also means we

cannot rule out the DKK again coming under pressure and if this were to

happen, we would expect DN to manage that pressure via intervention in FX

markets – we would not expect it to cut policy rates further.

Record-low policy rates have pushed market rates down, though borrowers –

with few exceptions – still face positive loan rates when all costs are

included. In reality, it is only the government that can earn money by

borrowing. Hence, in terms of the overall economy, there has been no radical

shift in conditions but rather a continuation of the trend towards lower

interest rates that has been in place since 2009. This is why we have not

significantly changed our growth outlook for Denmark for the coming years.

We continue to expect only moderate GDP growth.

True, low interest rates could stoke economic imbalances in the shape of

increased indebtedness and less saving but lending activity has remained very

low and there appears to be little prospect of any major change here. The

housing market is picking up but the improvement is not currently causing

any deep concerns. Nevertheless, it will be interesting to see whether

extraordinarily low interest rates have any consequences for financial

stability. Negative rates no doubt pose a challenge to commercial banks, even

though the DN has sought to ease the impact by increasing its current account

limits.

Non-standard Swedish monetary policy increases the risk of bubbles

Sweden’s Riksbank delivered a surprise on 18 March by deciding to cut the

repo rate to -0.25% and stepping up QE due to low inflation and the strength

of the SEK versus the EUR. Sweden’s economy faces a difficult balancing

act, as rate cuts in recent years have already pushed house prices to historical

highs. Hence, there is a real risk of low interest rates pushing house prices

even higher, making the economic consequences of future rate hikes

potentially very significant. Tighter credit policies have been introduced in an

attempt to mitigate the risk of a housing market bubble but, even after

tightening, we must conclude that the Swedish housing market is still red hot.

The central bank appears to be in a somewhat precarious situation but we

expect to see further monetary policy easing in Sweden in coming months.

The initiatives enacted so far have proved insufficient to weaken the SEK and

there is no immediate prospect of inflation or inflation expectations rising to

anywhere near the levels the Riksbank would like to see.

Additional monetary policy easing could increase domestic problems further

down the line. In the short term, however, low interest rates should have an

expansionary effect on the economy – and they are one of the reasons we

have a relatively optimistic view on the Swedish economy in coming years.

Nevertheless, the question remains whether Sweden is simply postponing the

payment of an inevitable bill.

House prices increasing rapidly in Sweden and

Norway

Source: National statistics offices

Swedish housing market is hot

Source: National statistics offices

Swedish central bank keeps an eye on EUR/SEK

Source: Macrobond Financial


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Norway hit by lower oil prices but economy remains stable

An expansionary monetary policy is also the story in Norway, although the

Norwegian central bank Norges Bank surprised the market on 19 March by

not cutting rates further. Nonetheless, we expect rates to be cut one last time

in June. The Norwegian economy is under pressure from the sharp fall in oil

prices since last summer and, while the economic fallout is being offset by a

weaker NOK and extremely low interest rates, it is inevitable that economic

growth in Norway will be lower going forward than it has been in recent

years, though Norway still looks set to outperform Europe in terms of growth

despite the fall in oil prices.

As in Sweden, the Norwegian central bank faces a delicate balancing act.

Extremely low rates could stimulate the housing market to an extent that

could cause a bubble but, on the other hand, too high interest rates could

result in a stronger NOK and push the economy towards deflation. This same

concern applies to Danmarks Nationalbank, which has clearly warned of the

risk of regional bubbles in the Danish housing market. While the central

banks are thus facing a difficult task, we must conclude that monetary policy

options are being tested to the extreme. Finland’s monetary policy is also

very accommodative as a result of the European Central Bank’s easing

measures. However, in Finland house prices are falling, so here extremely

easy monetary policy is unequivocally a welcome helping hand to an

economy in the doldrums.

Important general elections – not least in Finland

While the unusual financial situation, with record-low interest rates, is

drawing most of the attention, it is also worth noting that parliamentary

elections are scheduled in both Denmark and Finland this year. A change of

government in Denmark has traditionally not heralded any major shift in

economic policy in the short term and, regardless of who forms the next

government, the outlook is for a continuation of the EUR/DKK peg and a

stability-oriented fiscal policy. In Finland, on the other hand, the need for

further change is obvious to us, so it will be interesting to see whether a new

government could succeed in pushing through the necessary economic

reforms. Reform is a prerequisite for growth in the Finnish economy in

coming years, though it could well dampen economic activity in the short

term. Failure to reform would put the Finnish economy at risk of being

locked into a scenario of low growth and increase the risk of the rating

agencies downgrading Finland.

Low oil prices a drag on Norwegian GDP growth

Source: Energy Information Administration


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Denmark

Moderate growth despite very low rates

That the EUR/DKK peg is indisputable was underlined in January

and February when the DKK experienced pronounced appreciation

pressures. Danmarks Nationalbank countered with a combination of

rate cuts and FX intervention, taking the certificates of deposit rate to

-0.75% – its lowest level ever.

Lower interest rates stimulate growth – but as interest rates have

been falling for many years there has been no radical shift in

economic conditions. With few exceptions, borrowers still face

positive interest rates and low rates have not significantly changed

lending or saving behaviour – though we should track developments

closely, as interest rate levels are extreme.

Denmark’s economy is not only being supported by low interest rates

but also by low oil prices and a significant weakening of the effective

DKK exchange rate. Increased stimulation of the Danish economy

from external factors supports our moderately optimistic view on

growth, though the changes have not prompted us to make any major

revisions to our forecast from January. Nevertheless, our positive

growth expectations now have a firmer footing.

The Danish economy attracted considerable and unaccustomed attention in

early 2015 as a result of the strong appreciation pressures experienced by the

DKK in the wake of the Swiss National Bank abandoning its EUR/CHF floor

and the European Central Bank’s (ECB) decision to launch a major asset

purchase programme. As a result, the Danish central bank, Danmarks

Nationalbank (DN), cut its certificates of deposit rate four times in quick

succession by a total of 0.7 percentage points to -0.75% and intervened in the

FX markets to the tune of DKK275bn, taking the currency reserve to 38.5%

of GDP. Multiple rate cuts and very substantial currency purchases are

unusual, but nevertheless part of the DN’s standard defences to counter

upward pressure on the DKK. It is important here to emphasise that the

EUR/DKK peg is a cornerstone of the Danish economy and that the DN will

do whatever is necessary to defend its mandate.

Turning to the general macroeconomic situation, things are moving in the

right direction for Denmark. Growth has been positive for six quarters in a

row, employment is rising and the housing market improving. While growth

is still slightly lower than in our peer nations, there is reason to be pleased

with Denmark’s progress. The most significant changes to economic

conditions in Denmark since our January forecast are that the incredibly low

interest rates are now even lower and the effective DKK exchange rate has

weakened significantly. Low oil prices also continue to stimulate the Danish

economy. However, while the Danish economy is now being stimulated by

several external factors, we have not revised our growth forecast higher. We

expect growth of 1.7% this year, rising to 2.1% next year

Changes from previous forecast

Source: Statistics Denmark and Danske Bank

Danish economy moving in the right direction


% y/y 2015 2016 2015 2016

GDP 1.7 2.1 1.6 2.0

Private consumption 1.6 2.0 1.9 2.0

Public consumption 0.7 0.2 0.9 0.6

Gross fixed investment 2.5 3.9 2.2 4.0

Exports 3.3 4.9 2.3 4.2

Imports 2.8 4.6 2.9 4.6

Gross unemployment (thousands) 128.1 122.4 130.5 122.7

Inflation 0.7 1.7 0.6 1.5

Government balance, % of GDP -2.4 -2.5 -2.4 -2.4

Current account, % of GDP 5.9 5.4 6.4 5.9

Current forecast Previous forecast


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EUR/DKK peg non-negotiable

Denmark’s fixed-exchange-rate policy has been in the spotlight since our last

forecast as a result of strong appreciation pressures on the DKK. The upward

pressure led to four rapid-fire rate cuts and massive foreign currency

purchases, taking the certificates of deposit rate to -0.75% and the currency

reserve to 38.5% of GDP compared to 23.2% at the end of 2014. When

appreciation pressures were at their highest, the DN repeatedly stressed that it

would not depart from the EUR/DKK peg and that there was no upper limit

on the currency reserve. Pressure on the DKK and speculation on further rate

cuts have eased since 20 February. That pressure has eased was further

underlined by the DN’s decision to increase its current-account limits from

DKK37bn to DKK173bn in two rounds to reduce earnings pressures in the

financial industry. Within current-account limits, the banks can place liquidity

with the DN as current account deposits at 0% compared to -0.75% on

certificates of deposit. That appreciation pressures have eased does not mean

they cannot flare up again. We therefore expect that the certificates of deposit

rate will be kept unchanged for the next 12 months. The DKK continues to be

supported by a generally strong Danish economy including, not least, the very

large current account surplus, while the euro is weighed down by the ECB’s

asset purchase programme and concerns about Greece’s sovereign debt. Both

factors suggest that the DKK will continue to face appreciation pressures.

However, extremely low interest rates have certain consequences. First, they

put pressure on the bank system because the banks, as mentioned earlier,

mainly have to place funds with the DN at a negative rate. This means the

banks have an incentive to ‘put their money to work’, which can increase the

probability of them taking on too much risk. Hence, credit growth will come

under increasing scrutiny in the coming years. Second, very low interest rates

increase the risk of asset bubbles in, for example, the equity or housing

markets – and indeed attention has become increasingly focused on the

housing market in particular in recent months. It is less than ten years since

the Danish economy last experienced a housing market collapse, and record-

low interest rates have stoked fears of a new bubble forming, especially in the

Copenhagen apartment market.

Low interest rates supporting housing – no bubbles yet

The housing market has picked up in recent years. House and apartment

prices rose on average by 3.4% and 8.5%, respectively, over the year, which

is the highest growth rate since the last housing bubble burst. Housing market

growth has been driven by two factors: First, interest rates were already very

low – even before appreciation pressures on the Danish krone intensified in

early 2015 – which has helped make the financing of home purchases very

cheap. Second, the labour market has been improving. Both factors tend to

stoke demand and thus higher house prices. We expect house prices will

continue to rise in the coming years and forecast growth of 3.7% this year and

4.4% next year, which represents a minor upward revision to our January

forecast. Our revision has mainly been prompted by the further falls in

interest rates, though we do not expect lower rates to push prices that much

higher. The housing market in much of the country is simply too weak for

that to happen.

Extremely low policy rates in Denmark

Source: Danmarks Nationalbank

Currency reserve soars

Source: Danmarks Nationalbank and Statistics Denmark

House prices set to continue rising


House price growth not due to increased net

lending

Note: Data break September 2013

Source: Danmarks Nationalbank and Danske Bank


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Latest figures from the Danish Mortgage Banks’ Federation

(Realkreditforeningen) and others, which cover developments up to Q4 last

year, show that house prices rose from Q4 13 to Q4 14 for the country as a

whole, but that growth was not broadly based – with prices actually falling in

5 out of 11 regions. However, these price falls were not dramatic and there is

evidence of improvement in many parts of the country. The biggest price rises

were concentrated around the Greater Copenhagen area, though prices in

Northern Jutland also appreciated quire significantly. We expect the

nationwide improvement in the housing market to continue in 2015 given the

record-low level of interest rates. However, we would emphasise that these

very low rates are mainly stimulating prices in areas where prices are already

high. The risk of a price bubble in the housing market has attracted increasing

attention in recent months. The reason is the very low interest rates – and the

prospect of them remaining extremely low for a long time. Talk of a price

bubble is mainly concentrated on the Copenhagen apartment market, where

prices have appreciated by 42% since bottoming out in Q1 09. Relative to the

price peak, which occurred just prior to the financial crisis unfolding,

apartment prices are 11% below that level. However, prices approaching their

former peak says nothing about a potential bubble. Demand for apartments in

Copenhagen may also be driven by fundamentals, such as people relocating to

the capital and strong income growth.

One way of putting apartment price developments into an economic

perspective to assess the risk of a bubble forming is to consider prices relative

to regional GDP growth. Doing this makes the apartment market look less

threatening than simply focusing on nominal prices. Corrected for local GDP

growth, Copenhagen apartment prices have risen by 21.7% since bottoming

out. But there is still a gap to pre-crisis price levels and that despite interest

rates now being much lower than just before the crisis struck. In Copenhagen,

prices are now 29.8% below their peak in Q2 06. In other words, apartment

price increases do not look threatening when corrected for local GDP growth.

Lending growth is another important factor to consider when assessing

whether or not a housing market bubble is forming, as an expectations-driven

housing bubble goes hand in hand with excessive lending growth. Looking at

the trend in lending growth to households, overall lending has remained

largely unchanged since 2011. Hence, current housing market growth is not

being driven by increased levels of household debt.

Discounting a bubble does not change the fact that as a private individual one

should be careful not to be blinded by the prospects of low interest rates

continuing and a belief in eternally rising prices.

Weaker DKK a boon for exports

One of the reasons for the pronounced appreciation pressures on the DKK

was the asset purchase programme announced by the ECB. This weakened

the euro significantly, especially against the US dollar (and hence the Chinese

yuan, which is pegged to the dollar) and the pound sterling. As Denmark

pursues a fixed-exchange-rate policy, the DKK naturally weakened too. This

is best illustrated by the effective DKK exchange rate, which is a trade-

weighted aggregate of developments in the DKK compared to the currencies

of the countries we trade with. A decline in the effective exchange rate means

that the DKK is worth less, and the effective DKK exchange rate is currently

4.3% below its average level in December last year. The sharp fall in the

effective DKK exchange rate means that Danish exporters have received a

House prices down in 5 out of 11 regions

Source: Danish Mortgage Banks’ Federation, etc. and Danske Bank

Copenhagen apartment prices surge

Source: Danish Mortgage Banks’ Federation, etc .

Prices not so threatening when corrected for wage

and price growth

Note: Region GDP figures only available to 2013. 2014 data

projected by correcting nominal national GDP growth up by 0.8

percentage points.

Source: DMBF etc. Statistics Denmark, Danske Bank

Sharp decline in effective DKK exchange rate

Source: Danmarks Nationalbank


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competitive boost, as Danish goods have become relatively cheaper compared

to Chinese, US and UK goods. Hence, Danish exporters should not only find

it easier to sell their goods in China, the US and the UK, but also easier to

compete against Chinese, US and UK companies in other export markets.

This is a boon to an export-centric economy like Denmark’s.

In light of the sizeable decline in the effective exchange rate and the brighter

growth prospects for Europe, we have revised up our expectations for export

growth in the coming years. We now expect export growth of 3.3% this year,

rising to 4.9% next year. This is very positive news given that exports were

one of the major disappointments in the Danish economy last year. For while

total exports rose 2.9% between 2013 and 2014, the increase was largely due

to a jump in service exports in Q1 14. Goods exports actually declined by

0.1% between 2013 and 2014.

Debt a drag on consumption

Private consumption was once again lacklustre in 2014, increasing by just

0.4%. That was surprisingly little in a year with moderately higher real

incomes, increasing employment, very high consumer confidence and at the

very least a stabilisation of the housing market. One explanation was a 12.6%

decline in electricity and heating consumption. Car sales too have come under

suspicion, but for the year as a whole car sales rose 1.8% and thus contributed

to pulling overall consumption higher. One could well argue that underlying

private consumption growth is stronger than the overall figures suggest, but

growth is still undeniably on the low side of what is considered normal.

The explanation for the relatively low level of consumption is very probably

household debt. Stagnating consumption and rising real incomes have meant

a lesser need for consumers to regularly increase their debt levels – with 2014

being the first year when debt basically did not grow in DKK terms. In other

words, for the first time households were able to finance all their

consumption, pension contributions and general savings from their regular

income. Nevertheless, even if no longer growing, household debt is still

significantly higher than its pre-crisis levels – even after taking into account

that incomes have risen. And this is true despite house prices being lower and

loan-to-values thus higher.

Our forecast is based on rising household incomes over the coming years

being fed into increasing consumption that would take the annual growth rate

to around 2%. This means debt would remain almost unchanged in DKK

terms, but fall as a percentage of income. In other words, we do not

particularly expect record-low interest rates to boost private consumption via

increased indebtedness. However, as 2014 illustrates, our forecast carries

considerable uncertainty. It is entirely possible that higher incomes will be

converted into increased savings so that the high level of debt can be

reduced – or indeed that consumers may once again begin to borrow and let

consumption rise by more than incomes.

Exports should contribute to growth in the coming

years


Heating a drag on private consumption in 2014


Confidence indicators point to much higher

consumption growth


Household debt no longer growing

Note.: Data break September 2013

Source: Danmarks Nationalbank and Danske Bank


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Inflation returns

January 2015 was the first month since 1954 when the consumer price index

was not higher than at the same time the previous year, as prices actually fell

by 0.1%. However, inflation had already returned by February, as prices rose

by 0.2%, and the signs are that inflation will rise quite substantially this year.

Lower oil prices were the main deflation culprit in January, but we expect

them to reverse going forward. The pronounced weakening of the euro and

hence the DKK in recent months should eventually translate into higher

import prices and thus higher inflation. Year-on-year inflation is also

currently being pulled lower by food prices falling in the first four months of

2014, but that effect will gradually ease. Cuts in taxes and duties will

contribute to lowering inflation in 2015, though the effect will fade in H2 and

disappear completely in 2016.

Wage growth in the private sector appears to have accelerated slightly in the

latter half of 2014 and we estimate it will accelerate a little more in the

coming years. This, together with rising employment and declining interest

rates, should boost real incomes by 2% in 2015 and just under 1.5% in 2016.

Labour market set to improve further

The labour market continues to be one of the bright spots in the Danish

economy. A further 4,900 jobs were created between Q3 and Q4 last year,

taking the total number of new jobs created since employment bottomed out

in Q1 13 to 31,800. Employment growth since that low is due to 36,600 new

jobs being created in the private sector, while the public sector shed 4,800

jobs. Private sector employment performing so well despite just modest GDP

growth is in part due to GDP growth being held down by less labour-intensive

industries. Hence, gross value added (GVA) in private sector non-farm and

non-oil industries has actually been positive every year since 2010 and

showed robust growth of 2.0% in 2014, which is some way above GDP

growth of 1%.

We have revised our employment expectations higher since our last forecast

in January – mainly because we have become more optimistic about the

Danish economy. We now expect employment to increase by a little over

37,000 from Q4 14 to Q4 16, taking the number of people in work to just

below 2,814,000. We assume that employment growth will mainly be via the

private sector, though we also expect public sector employment to start

increasing slightly, as this is assumed in the government’s economic policy.

Average gross unemployment fell by 18,300 from 2013 to 2014 to stand at

130,000 or 4.9% of the workforce in January this year. However, while gross

unemployment has fallen, it has been at a somewhat slower pace than the

pickup in employment. This is no bad thing, as it signals that the workforce is

expanding. Given that we expect employment to increase in the coming years,

we also expect gross unemployment to fall further. However, this will still not

match the pace of growth in employment, as we reckon more people will

enter the workforce as the outlook for jobs improves. Our forecast is for gross

unemployment to fall by just under 10,500 and stand at slightly above

119,500 by the end of 2016. If we are proved correct, gross unemployment

will only ever have been lower in connection with Denmark’s economy

overheating. While low gross unemployment also indicates that structural

unemployment is low, gross unemployment falling very sharply would not be

good news for the Danish economy, as we would risk the labour market

overheating again before a new recovery has even properly taken hold.

Deflation in January a one-off


Wage growth still low


Solid growth in private sector non-farm and non-oil

industries explains job gains in recent years


Higher economic growth will help lift employment

Source: Danmarks Statistik og Danske Bank


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Budget deficit not a problem for the economy

Government finances have attracted considerable attention in recent years.

Prior to the crisis, Denmark ran a solid budget surplus, which in 2006 and

2007 reached 5% of GDP. The financial crisis and the subsequent economic

crisis have, however, since turned surplus into deficit, apart from in 2014,

when the bringing forward of a tax on pension savings secured an artificial

and temporary surplus. Looking ahead, both 2015 and 2016 appear set to see

sizeable budget deficits. And while we do not expect the deficits to breach the

EU limit of 3% of GDP, the scale of the deficits will leave little or no scope

for fiscal easing in the coming years.

Parliamentary elections are due to be held by mid-September this year at the

latest. General elections in Denmark often do not result in any great change to

economic policy in the short term, and this is also our expectation following

the upcoming vote. Naturally, economic policy differs between the two main

political blocks, but the budget and the government deficits limit the scope of

politicians to act in the short term. Hence, our forecast for the coming years

does not depend on the results of the general election. Looking at planned

fiscal policy, the outlook is for government consumption to increase slightly

in the coming years. Presumably that also means the trend of declining public

sector employment will reverse, though this is by no means certain. Public

sector employment has in fact fallen in recent years despite it being projected

to increase and despite government consumption in fixed prices rising. We

assess overall economic policy to be essentially activity-neutral, which at the

moment seems sensibly in line with the state of the economy.

Labour shortage could soon be looming again


Budget deficit close to – but below – EU limit


Government has consistently overestimated

number of public sector employees

Source: Statistics Denmark, Economic Survey and Danske Bank


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Denmark: Forecast at a glance

Source: Statistics Denmark, Danmarks Nationalbank, Macrobond, Danske Bank

National account 2013 2013 2014 2015 2016

DKK bn (current prices)

Private consumption 890.2 0.0 0.4 1.6 2.0

Government consumption 504.0 -0.5 1.4 0.7 0.2

Gross fixed investment 345.7 1.0 2.9 2.5 3.9

- Business investment 205.6 3.4 1.9 5.0 6.4

- Housing investment 70.7 -5.0 4.5 -2.2 3.3

- Government investment 69.3 0.3 4.5 -0.1 -3.2

Growth contribution from inventories -0.2 -0.2 0.3 0.0 0.0

Exports 1023.8 0.8 2.9 3.3 4.9

- Goods exports 627.0 1.8 -0.1 2.2 4.7

- Service exports 396.9 -0.8 7.8 5.1 5.1

Imports 915.5 1.5 4.0 2.8 4.6

- Goods imports 574.9 3.6 2.4 2.2 4.3

- Service imports 340.6 -2.0 6.7 3.9 5.1

Growth contribution from net exports -0.3 -0.3 -0.3 0.4 0.4

GDP 1886.4 -0.5 1.0 1.7 2.1

Economic indicators 2013 2014 2015 2016

Current account, DKK bn 136.0 118.6 115.0 110.0

- % of GDP 7.2 6.2 5.9 5.4

General government balance, DKK bn -14.0 31.0 -46.3 -50.0

- % of GDP -0.7 1.6 -2.4 -2.5

General government debt, DKK bn 851.1 864.8 764.1 803.0

- % of GDP 45.1 45.1 38.9 39.4

Employment (annual average, thousands) 2748.8 2768.4 2786.7 2805.6

Gross unemployment (annual average, thousands) 152.9 134.6 128.1 122.4

- % of total work force (DST definition) 5.8 5.1 4.8 4.6

Oil price - USD/barrel (annual average) 109 99 66 78

House prices, % y/y 2.7 3.4 3.7 4.4

Private sector wage level, % y/y 1.2 1.3 1.8 2.2

Consumer prices, % y/y 0.8 0.6 0.7 1.7

Financial figures 24/03/2015 +3 mths +6 mths +12 mths

Lending rate, % p.a. 0.05 0.05 0.05 0.05

Certificates of deposit rate, % p.a. -0.75 -0.75 -0.75 -0.75

2-yr swap yield, % p.a. 0.13 0.10 0.10 0.10

10-yr swap yield, % p.a. 0.78 0.85 0.95 1.10

EUR/DKK 7.459 7.449 7.449 7.449

USD/DKK 6.79 7.38 7.52 6.90

Forecast

% y/y


No

rdic O

utlo

ok

Nordic Outlook

Sweden

Riksbank goes to currency war?

The ECB’s quantitative easing (QE) has proved a formidable foe for

the Riksbank to overcome, as it is widely expected to lead to SEK

appreciation. So far, the Riksbank has lowered the repo rate, to

minus 0.25% and sent a couple of QE test balloons, amounting to a

total of SEK40bn.

Keeping up a deterrent policy on the exchange rate, the Riksbank has

also stated that it is working with an asymmetric reaction function

(negative outcomes are allotted a higher weight in decisions) and has

indicated that possibly another cut and an expanded QE programme

are the first lines of defence. After that, the Riksbank suggests QE in

foreign bonds (currency interventions) is a policy option under

serious consideration.

Talk is cheap, we fear, and the Riksbank will probably need to take

further unconventional monetary policy action but not until the

current programme terminates (beginning of May), at which point we

expect our forecasts on inflation again to undershoot those of the

Riksbank. We believe, for now, that a small additional cut (5bp) and

a new expansion (SEK30bn) of the program is to be expected.

We note event risks will remain strong throughout the forecast

horizon, especially given the implied asymmetric reaction function

from the Riksbank, and we see a high risk of even more aggressive

actions (including currency interventions). Variables to keep an eye

on in particular are the SEK, spot inflation and inflation

expectations.

Further policy action and a stronger-than-expected starting position

in 2015 have led us to revise our GDP growth forecast for 2015 from

1.7% y/y (volume calendar adjusted) to a still rather uninspiring

2.1% y/y. In 2016, at 2.1% y/y, our GDP growth forecast is more or

less unchanged compared with earlier forecasts.

Under virtually any circumstances, inflation should, in our view,

begin to push back from negative territory and show some

momentum over the forecast horizon. However, we do not expect the

pace to be to the Riksbank’s liking, which will probably, as

mentioned above, provoke further policy actions, as mentioned above.

Swedish GDP to become more balanced, at long last

Supportive financial conditions and very strong forecasted global demand are

good news for the Swedish economy, which thus far has been relying mainly

on consumption and housing investments. Now, exports are set to rise and

business sector investments (ex housing) should thus also improve. Danske

forecast for the Swedish economy, while maybe not among the most

optimistic, should provide relief to policy makers, since it suggests that

demand is becoming less dependent on monetary and fiscal expansion. In our

view, this implies that a necessary fiscal consolidation will also take place,

but hopefully not to an extent that derails the economy. That said, the fiscal

consolidation and a pervasive focus on the currency will compel the

Riksbank to keep an even more expansionary monetary policy stance.

Changes relative to previous forecast

Source: Statistics Sweden (SCB). Danske Bank calculations

On top of the Riksbank’s observation list

Sources: TNS Prospera, Statistics Sweden (SCB), Riksbank and

Macrobond. Danske Bank calculations.

GDP and investments growth on export markets

Source: National Institute for Economic Research (KI) and

Statistics Sweden (SCB). Danske Bank calculations

Exports aligning to strong world market growth

Sources: National Institute for Economic and Social Research

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

Statistics Sweden (SCB). Danske Bank calculations [both charts]

% y/y 2015 2016 2015 2016

GDP, calendar adjusted 2.1 2.1 1.7 2.0



Gross fixed investment 6.0 3.8 3.4 2.1

Exports 5.5 4.9 3.2 5.0

Imports 6.6 5.1 3.7 4.5

Unemployment rate 7.7 7.5 7.6 7.3

Inflation 0.3 1.2 0.3 1.2


Current account, % of GDP 5.6 5.7 5.0 4.8


Sweden


No

rdic O

utlo

ok

Nordic Outlook

Danske estimates that Swedish GDP-growth will be a solid although perhaps

a tad uninspiring 2.1% y/y in both 2015 and 2106.

Stronger demand for Swedish exports

Danske Bank’s international demand forecasts imply an improvement in

global economic activity and the main impetus is stronger-than-consensus

growth in mainland Europe. Should this materialise, it would be a reliable

signal of improved demand for Swedish export products too. Indeed, we

expect the weighted import demand on Swedish export markets (Swedish

world market growth) to accelerate from 2.1% y/y in 2014 to 5.1% y/y in

2015. In 2016, we expect world market growth to increase further, to 5.5%

y/y. External demand and the Riksbank’s apparent focus on keeping the SEK

competitive solidify a positive near-term setting for Swedish exports.

Importantly, the lion’s share of Swedish export products are input and

investments goods, products that have experienced very slow global demand

growth ever since the outbreak of the financial crisis in 2008/09. This is an

explanation of why Sweden has been losing market shares for the past few

years. This circumstance has often kept our Swedish export outlook at bay,

even when our international growth forecasts have been more upbeat.

However, according to our current forecasts, the cloudy outlook for global

investments is also about to lighten, so Swedish exports are set to turn a

corner. All in all, we expect growth in Swedish exports more or less in line

with world market growth, implying 5.0% y/y growth in 2015 and 4.5% y/y

growth in 2016.

Such strong export growth would also be a welcome sign that Swedish

growth is becoming more balanced, after relying almost solely on domestic

demand for most of the past few years.

Stimulative economic and financial conditions

We have briefly touched on the Riksbank’s strong focus on the SEK, which

we believe will set a ‘soft floor’ under EUR/SEK. However, this could be

made more explicit should the Riksbank find its current measures unable to

stave off appreciating pressures. That said, our currency forecasts imply a

very gradual strengthening of the SEK but not sufficient to provoke outright

currency intervention from the Riksbank.

As for market interest rates, we believe that the Riksbank’s QE programme

and the high probability of further Riksbank action will serve to keep

Swedish interest rates down, especially in the longer dated maturities. This is

also a year with very small net issuance of government bonds, so the

comparatively small purchases will give the Riksbank a large share of the

outstanding nominal stock of bonds (c.7%) and add to the risk of rather large

price effects on government bonds from even relatively limited asset

purchases. Add to this that we have seen quite strong demand from foreigners

in the wake of the ECB’s bond buying programme and very high savings

ratio in the private sector, some of it sure to enter the fixed income markets,

and it should be clear that interest rates could very well continue their

downward trajectory.

Will the Riksbank join the currency wars?

Sources: Macrobond, NIER and Riksbank. Danske Bank

calculations

Market interest rates (swap curve) at different

dates

Source: Macrobond, Riksbank. Danske Bank calculations

Swedish stock markets are going strong

Sources: Nasdaq OMX, Standard & Poor’s and Macrobond. Danske

Bank calculations

The fiscal policy stance is becoming less

expansionary

Sources: National Institute for Economic and Social Research

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

Statistics Sweden (SCB). Danske Bank calculations.


No

rdic O

utlo

ok

Nordic Outlook

Swedish stock markets took off at the start of 2015 and after less than two

months had passed what we thought was a stretched objective for 2015. From

here we are more cautious but see no reason as yet to become outright

negative on earnings growth as sales growth is finally set to be a driving

factor behind company results. Furthermore, a persistently weak SEK serves

to underline our expectations of a benign sales and earnings environment as

the Swedish stock market is densely populated with large exporting

companies.

House prices are continuing to defy our long-held view of a necessary

alignment of prices to incomes and have even accelerated over the past few

months (also in relation to incomes). This gets even more disturbing

considering that the Swedish Financial Supervisory Authority (FI) recently

published quite demanding restrictions for any newcomer to the housing

party, implying, inter alia, amortisation down to 50% LTV. We firmly

believe that the restrictions will eventually have an effect on the housing

market and that the boost we see now may only be a sign of pre-emptive

purchases before the new regulation takes effect. Going forward, we continue

to expect a small but noticeable fall in house prices.

At around -2% of GDP, the fiscal policy stance remains expansionary, even

when compared with the business cycle. The Ministry of Finance admits to

this and calculates an upcoming savings need of approximately SEK75bn.

However, the National Institute for Economic Research (NIER) estimates

that the shortfall is much higher, some SEK125bn. However, both these

estimates rely on potential growth rates far above our own. When taking the

possibility of a lower trend growth rate into consideration, we reach a total

structural savings need of almost SEK200bn. Thus, under most scenarios,

fiscal policy will tighten considerably and act as a highly unwelcome

impediment to Swedish growth.

In order to capture the overall stance of the economic and financial

conditions mentioned above, we have estimated a so-called Monetary

Conditions Index (MCI). Admittedly, it is a very crude measure but,

nonetheless, it suggests that overall financial conditions are improving, which

comes across as fair given the strong monetary policy responses over the past

few months.

Broad-based investment upturn

Overall, investments rose 6.7% y/y in 2014. However, looking at the

distribution by sector, we see large divergences. Housing investments

increased by more than 20% y/y, in stark contrast to business sector

investments, which increased only a little more than 3% y/y, while public

investments were lower still, coming in below 2% y/y. The weak business

sector investment (excluding housing) is explained mainly by very low global

demand, in particular for characteristically Swedish export products such as

input and investment goods.

Economic conditions broadly balanced

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

different interest rates and an exchange rate index (all variables

are normalized and adjusted for inflation).

Source: Macrobond. Danske Bank calculations

Urbanization driving house prices

Sources: Nasdag OMX – KTH and Macrobond. Danske Bank

calculations

Investments growth by sector (and type)

Sources: National Institute for Economic Research (KI) and

Statistics Sweden (SCB). Danske Bank calculations

Orders, industrial production and capacity

utilization

Sources: Macrobond, National Institute for Economic Research (KI)

and Statistics Sweden (SCB). Danske Bank calculations


No

rdic O

utlo

ok

Nordic Outlook

This said, beneficial financing conditions, strong international demand

growth and a continued high level of domestic demand are producing fertile

soil for an investment upturn. Indeed, industrial production has started to

increase, alongside capacity utilisation. As both exports and domestic orders

are on the increase, business sector investments (excluding housing) should

post sturdy growth over the forecast horizon. As mentioned above, housing

investments have posted stalwart growth rates for a couple of years but we

believe that momentum will now start to recede as new mortgage regulations

are introduced, price developments slow and income growth will, at best, be

moderate in the coming years.

Public investments have remained at a high level ever since the crisis struck in

2008/09 but the weakened fiscal position has recently resulted in consecutive

contractions that may very well continue deep into the forecast horizon.

Taken together, we expect investment growth to reach 6.7% y/y in 2015 and

post still-solid 5.6% y/y growth in 2016. In short, investments are finally set

to contribute handsomely to GDP growth over coming years.

Consumption growth set to moderate

The cyclical rebound following the international financial crisis of 2008/09

has, at least from a Swedish perspective, demonstrated that this time is

different. Instead of the customary recoil in exports on the back of strong

international demand and a late-cyclical rebound in consumption (and

housing investments), it has now been at the vanguard of the cyclical

upswing. This counter-intuitive development is explained most easily by the

aggressive and swift monetary and fiscal policy response, which gave rise to

a ‘free cash flow’ shock sufficient to explain both high savings and high

consumption growth. However, looking ahead, we expect consumption to

face the strongest headwinds in years. First, income growth is set to be slow

due to very low – receding – wage growth. In addition, the government’s

fiscal position will necessitate tax hikes and/or lower transfers, which will act

to lower disposable income growth. On a related note, with mandatory

amortisation (savings), the new mortgage regulations from the Swedish FSA

will also work to decrease the free cash flow of Swedish households and

further hamper near-term consumption.

In short, we believe the consumption outlook is challenging, so we do not

expect the very high growth rates of yesteryear to continue in the forecast

years. Nonetheless, this is a far cry from expecting weak consumption.

Overall, we expect private consumption to grow 1.9% y/y in 2015 and 1.7%

y/y in 2016, still close to the historical average.

Labour markets and resource utilisation

Towards the end of last year, we saw a significant deceleration in

employment and the unemployment rate even held still at 7.8% throughout

the latter half of 2014. In our opinion, this is explained mainly by very high

productivity in the wider business sector (including construction) and not a

sign of an underlying weakening of the labour market. This said, the labour

market is apparently in a state of high flux, with large flows between

industrial sectors and worker groups. Very few sectors indicate any

difficulties in hiring even specialised workers and immigration continues to

keep the supply of labour high, so we expect few, if any, bottlenecks building

in the near term.

Disposable incomes and savings ratio

Source: SCB and NIER. Danske Bank calculations

Consumer confidence

Sources: Macrobond and KI. Danske calculations

Consumption outlook stabile

Source: KI and SCB. Danske Bank calculations

Employment plans and vacancies are improving

Sources: Macrobond, SCB and KI. Danske Bank calculations.


No

rdic O

utlo

ok

Nordic Outlook

Under any circumstances, job openings and demand point to healthy

underlying growth in employment and we continue to expect a gradual, albeit

very slow, improvement in labour markets. As a firmer trend in employment

takes hold, we forecast the unemployment rate will fall from current levels to

below 7.5% by the end of 2016.

The continued high unemployment rates, largely a reflection of strong labour

supply, suggest that resource utilisation continues to be too low to stoke wage

and price inflation. Looking at measures of capacity utilisation from the

Riksbank (the RU indicator), the SCB and the NIER, it seems that capital is

also abundant, strengthening our view of still-low resource utilisation. This

more qualitative description also seems to fit our quantitative estimate of

resource utilisation – the output gap – very well.

Inflation and the Riksbank

Pervasive low resource utilisation leaves little room for aggressive wage

increases. Sure enough, the Swedish Mediation Office (Mi) estimates that

centralised wages will grow by approximately 2.3% in 2015 and most

forecasts, including our own, point to very low wage drift, around 0.5pp. This

means that wage growth is again set to come in far below what is compatible

with the inflation target in 2015. In a sad twist of fate, centralised wage

negotiations are set to start in the autumn of this year and are due to be

finalised at the beginning of 2016, which, given the current environment with

low resource utilisation and low expected wage increases and inflation, will

make it hard even to exceed the low outcome of the last round. Our own

estimates of wage growth suggest only a little above 2.5% y/y both this year

and next, which is low by any standards and taken in conjunction with our

view of a slight acceleration in productivity implies very low cost pressure

indeed.

The situation above suggests that the gains from higher international demand

will mainly benefit capital owners, which given their obvious difficulties in

restoring the profit share (of GDP) over the past few years would be helpful.

Indeed, we consider the above developments a prerequisite for wage and

inflation pressures to start normalising again beyond our forecast horizon.

From a Riksbank view, the conclusion is straightforward – no hikes until

2017, at the earliest. To keep the currency war from entering the Swedish

economy, the Riksbank probably needs to continue balancing the spillover

effects on the SEK of the ECB’s bond buying. In a first line of defence, we

expect the Riksbank to continue expanding its QE programme come the

summer and onwards. However, there is an apparent risk that the Riksbank

measures will not suffice, which is why we believe there is also a very high

chance of the Riksbank being pushed to use the ‘nuclear’ option, i.e. currency

intervention, somewhere down the road.

Resource utilization remains low…

Sources: KI and SCB. Danske Bank calculations

And, albeit slowly, labour markets will ameliorate

Sources: KI and SCB. Danske Bank calculations

And inflation becoming entrenched below target

Sources: SCB, Riksbank and Macrobond. Danske Bank calculations

No hike in our time

Sources: Riksbank and Macrobond. Danske Bank calculations.


No

rdic O

utlo

ok

Nordic Outlook

Sweden: Forecast at a glance

Note: The national account figures relates to actual growth rates (i.e. not calendar adjusted or wda)

Source: Danske Bank

National account 2013 2013 2014 2015 2016

SEK bn (current prices)

Private consumption 1718.2 1.9 2.4 2.0 1.8

Government consumption 955.7 0.7 1.9 1.2 1.5

Gross fixed investment 674.2 -0.4 6.5 6.0 3.8

Growth contribution from inventories -4.4 0.0 0.2 0.0 0.1

Domestic demand 3348.1 1.0 3.2 2.8 2.2

Exports 1722.4 -0.2 3.3 5.5 4.9

Aggregate demand 3343.7 1.1 3.4 2.8 2.3

Imports 1516.4 -0.7 6.5 6.6 5.1

Growth contribution from net exports 206.1 0.2 -1.0 -0.2 0.1

GDP 3549.7 1.3 2.1 2.4 2.3

GDP, calendar adjusted 1.3 2.3 2.1 2.1


Trade balance, SEK bn 142.2 123.7 136.1 141.3

- % of GDP 3.8 3.2 3.4 3.4

Current Account, SEK bn 260.4 224.9 228.5 238.2

- % of GDP 6.9 5.8 5.6 5.7

Public sector savings, SEK bn -45.3 -82.1 -81.1 -42.0

- % of GDP -1.2 -2.1 -2.0 -1.0

Public debt ratio, % of GDP* 38.6 41.2 41.8 42.3

Unemployment, % of labour force 8.0 7.9 7.7 7.5

Hourly wages, % y/y 2.4 2.8 2.6 2.5

Consumer prices, % y/y 0.0 -0.2 0.3 1.2

House prices, % y/y 3.6 7.3 0.0 -4.0

* Maastricht definition

Financial figures +3 mths +6 mths +12 mths

Repo rate, % p.a. -0.25 -0.30 -0.30 -0.30

2-yr swap yield, % p.a. -0.05 0.00 0.00 0.00

10-yr swap yield, % p.a. 0.89 1.05 1.05 1.15

EUR/SEK 9.31 9.20 9.10 8.90

USD/SEK 8.48 9.11 9.19 8.24

24/03/2015

Forecast

% y/y


No

rdic O

utlo

ok

Nordic Outlook

Norway

Noticeable growth slowdown

The decline in oil investment is beginning to be noticed in the

economy. Nevertheless, developments since our last report have been

roughly as expected. The worst is probably still to come though, with

higher unemployment and more bankruptcies on the cards.

The Norwegian krone (NOK) weakening significantly has helped

offset the impact of reduced investment.

Moreover, interest rate cuts appear to have made households more

optimistic, which should support both private consumption and the

housing market.

Unemployment looks set to increase, but should be limited by

economic adaptation and a flexible labour market.

How the fall in oil prices will affect sentiment among Norwegian

households, businesses, banks and other players remains uncertain.

Norges Bank kept policy rates unchanged in March, but we expect

another cut in June and then it to remain on hold until late 2016.

The wage model appears to be working, with wage growth slowing

without unemployment rising.

Mild slowdown

The Norwegian economy grew surprisingly strongly in 2014 but plummeting

oil prices have led to a significant deterioration in economic conditions.

Nevertheless, we expect the downturn to be both mild and short-lived, as the

Norwegian economy is actually relatively robust, even to large swings in oil

prices. In our view, the weakening of the krone that has accompanied the

decline in oil prices will facilitate the necessary reorganisation of the

Norwegian economy as growth impulses from the oil sector dwindle. We

now also expect to see the value of the fiscal policy rule that links

government spending to the long-term real return on the oil fund. Unlike in

many other oil-producing nations, where public finances now face major

challenges, the flexibility of Norwegian fiscal policy is intact. There is no

need for urgent tightening, which could exacerbate the economic downturn.

Our analysis points to a relatively modest rise in unemployment and

continued growth in household real income, supported by lower interest rates.

As a result, the chances of a serious downturn in the housing market and

private consumption seem to be limited. Other than a further slide in oil

prices, the risk is that Norwegian households, businesses, banks and other

players will become more cautious, leading to a self-reinforcing economic

downturn. On the other hand, oil prices could bounce back more quickly than

expected, which would limit the negative effects on the Norwegian economy.

In the slightly longer term, we still believe oil prices will have to return to

levels that will make the upcoming development of new fields in the North

Sea profitable. In our view, this is not so much the beginning of a long

downward spiral in the Norwegian oil sector as a long overdue breather.


Source: Macrobond, Statistics Norway, Danske Bank Markets

Lower oil prices will hit growth in 2015

Source: Statistics Norway Danske Bank Markets

% y/y 2015 2016 2015 2016

GDP (mainland) 1.7 2.2 1.8 2.3



Gross fixed investment -6.5 1.0 -5.5 1.3

Exports 2.5 1.0 0.8 0.9

Imports 1.0 3.0 3.8 3.3

Unemployment (LFS) 3.7 3.7 3.7 3.7

Inflation 2.8 2.0 2.8 2.0


Norway


No

rdic O

utlo

ok

Nordic Outlook

Lower oil prices spell lower growth

Oil investment has been slowing since the end of 2013 and will continue to

fall through to the end of 2016. This has put a damper on economic

expansion, though the slowdown appears to be roughly as we expected in

December – mainly due to stronger growth in mainland exports, surprisingly

high activity in oil-related industries and brisk growth in public sector

demand. Meanwhile, oil investment looks set to be not much below what we

assumed in December, even though the oil price has fallen from USD70/bbl

to USD55. As a result, unemployment has risen just modestly. Moreover

housing market sentiment seems to have improved. Mainland GDP now

looks set to be 1.7% 2014, with Norges Bank’s regional network survey then

pointing to slightly weaker growth in the first part of 2015.

Lower oil prices affect the Norwegian economy through three channels:

government oil revenue decreases, oil investment falls and profitability and

wage growth fall, which can hit private consumption and investment.

Increased uncertainty among households, businesses, banks and other players

can also in itself result in lower activity.

We now expect oil investment to make a negative contribution to growth in

2015 and 2016, but also expect oil investment to pick up again from 2017.

Based on Statistics Norway’s oil investment survey, we now expect oil

investment to fall by around 14% this year.

The decline in oil investment is beginning to show up in the activity levels of

the oil-related industries. New orders have dried up, profits have fallen and

the focus now is on cost cutting and job shedding. The decline in North Sea

investment has been reinforced in recent months by significant cuts in global

oil investment, with the situation in Brazil looking particularly uncertain.

Hence, the worst is probably still to come. One bright point, however, is that

the three first large contracts tied to the new Johan Sverdrup field have all

been won by Norwegian suppliers.

Moreover, we expect that oil prices will begin to rise again after the summer,

which should mean a gradual stabilisation in oil investment both globally and

in Norway.

With several relatively large projects due to start up from late 2015, we

expect the fall in oil investment to be short-lived rather than mark the start of

a long-term decline in the Norwegian oil sector. This also means that the

need for economic reorganisation will be limited, which will decrease the

downside risk at this time.

Meanwhile, the krone has continued to depreciate since Nordic Outlook –

January 2015. Together with slightly stronger global growth, we expect this

will boost the export industry through higher activity and profitability. The

battle for skilled labour will also be less intense and so wage growth will be

more restrained. This will reduce the negative effects of lower oil investment,

with workers surplus to requirements in oil-related industries able to find work

in other industries. The increase in the number of jobless will therefore be

smaller than would otherwise have been the case, reducing the risk of second-

round effects via the housing market and private consumption.

Sharp fall in oil prices

Source: Macrobond Financial

Mainland exports boosted by weak NOK

Source: Statistics Norway


No

rdic O

utlo

ok

Nordic Outlook

Housing investment has fallen relatively sharply since last spring. A fall in the

housing supply combined with increased purchasing power on the back of lower

interest rates has helped house prices recover. As well as higher prices, turnover

has also increased and sales times have fallen. Sales of new homes have also

risen and are now 15-20% higher than a year ago. This has prompted a pickup in

new housing starts. We therefore expect housing investment to increase by

around 5% this year.

Retail sales growth has been above 2% y/y in recent months, i.e.

approximately as we expected, though uncertainty remains high. Lower oil

prices and a weaker growth outlook have dampened household expectations

going forward and this may result in a higher savings rate and thus lower

consumption growth. On the other hand, we still expect household real

disposable income to grow by around 2% due to lower interest rates.

Essentially we see no great risk of a serious setback in private consumption

unless household finances deteriorate significantly.

Bank lending policies still show no sign of having been negatively affected

by the fall in oil prices. Good capital adequacy, solid margins and low

impairments are probably the main reasons for this. The banks being willing

to lend will also help reduce the downside risk in the Norwegian economy.

Housing market in high gear

The housing market has performed better than we expected in the previous

Nordic Outlook. Prices are rising rapidly, turnover is high and sales times are

falling. December’s rate cut and the prospects of more to come has upped

price expectations.

We also see clear signs of new home starts beginning to react positively to

rising house prices. Boligprodusentenes landsforbund (Norwegian

Homebuilders’ Association) reports that sales of new homes have increased

20% over the last year and that new home starts are up 65% over the same

period, albeit from a very low level.

Our view is that the increased supply of homes will serve to dampen house

price growth for the rest of the year and into next year. However, we continue

to believe that the risk of a serious setback in the housing market is relatively

limited in the short term despite weaker growth and slightly higher

unemployment. Lower real wage growth will be more than offset by lower

interest rates, meaning household debt-servicing capacities will actually

grow.

Modest increase in unemployment

It is still difficult to find any evidence of the slowdown in the Norwegian

economy in the labour market. Even the major rounds of downsizing and

redundancies in the oil-related industries in the autumn have only increased

jobless figures marginally.

Part of this probably has to do with overall economic growth holding up

relatively well to date, driven by stronger growth in other sectors. The

Norwegian labour market has also become very flexible since the

enlargement of the EU in 2005. A slightly weaker labour market will

therefore result in reduced use of temporary foreign labour, thus limiting the

rise in unemployment

New housing starts will boost housing

investments


House prices are rising rapidly

Source: Real Estate Norway

Moderate rise in unemployment



No

rdic O

utlo

ok

Nordic Outlook

Nevertheless, we expect unemployment to rise slightly as the slowdown in

the oil-related industries intensifies.

The Norwegian wage model also appears to be working. Wage growth now

looks set to ease without unemployment having appreciably increased. Local

wage settlements last autumn were lower than expected and labour market

players have clearly signalled that central wage agreements will be very

modest this year. The fall in oil prices will tend to erode profitability in all

sectors and thus affect the wages they pay. This plus increasing

unemployment will probably also result in low local wage agreements. We

therefore estimate that wage growth will be slightly below 3% this year and

slightly above 3% next year.

Inflation set to increase in the short run

Core inflation has risen over the past year, driven by the weaker exchange

rate pushing import prices up. At the same time, productivity growth is still

modest and this, coupled with wage growth of around 3.0% last year, has

contributed to domestic prices climbing 2.75% on an annualised basis.

There is normally a time lag of six to nine months before store prices for

imported goods react to movements in the krone, although this varies

somewhat from sector to sector. Higher import prices will therefore probably

continue to push core inflation up rapidly for a few months yet.

The import-weighted krone is now around 5% weaker than at the time of our

previous report. Although we expect a somewhat stronger krone heading into

summer, this nevertheless means we expect price growth for imported consumer

goods to accelerate from 1.5% up towards 2.5% in H1 15. In our view, this will

push overall core inflation up towards 3% before the summer, after which we

expect it to fall due to base effects, a stronger krone and slightly lower domestic

inflation.

Rates to bottom out in June

Norges Bank (NB) delivered a slight surprise at its interest rate meeting in

March by keeping rates unchanged. Essentially it seems that our risk scenario

played out in that, first, NB assessed the economy to have developed ‘broadly

in line’ with what was projected in its previous monetary policy report. And

second, the acceleration in house prices following the rate cut in December

has underlined that the room to manoeuvre with monetary policy is slightly

limited. NB therefore wants to be sure the economy is weakening further

before it cuts rates again. We expect that economic data in the coming

months will illustrate the ongoing slowdown in the oil-related industries and

the subsequent spill-over onto the rest of the economy. We therefore expect

that NB will cut interest rates to 1.0% in June and that rates will then remain

on hold for some considerable time.

Given that the market still expects two rate cuts and that we expect oil prices

to stabilise in H1 15, we also expect the NOK to be stronger towards the end

of the year than it is now. The NOK is, moreover, currently weaker than its

long-term equilibrium level, even when taking a lower oil price into account.

Modest wage growth


NB to cut interest rates in June

Source: Norges Bank


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Norway: Forecast at a glance

Source: Danske Bank

National account 2013 2014 2015 2016

NOK bn (2012 prices)



Gross fixed investment 704.8 1.2 -6.5 1.0

Petroleum activities 204.5 0.0 -14.0 -4.0

Mainland Norway 492.2 1.8 1.0 3.7

Dwellings 149.2 -1.6 3.0 2.0

Enterprises 220.6 0.3 -1.0 0.8

General government 122.5 8.5 2.0 3.5

Mainland demand 2675.2 2.1 1.6 2.5

Growth contribution from stockbuilding 0.4 -0.1 0.0

Exports 1168.5 1.7 2.5 1.0

Crude oil and natural gas 564.2 0.9 -0.8 -1.0

Traditional goods 312.5 2.7 4.2 2.7

Imports 856.6 1.6 1.0 3.0

Traditional goods 508.1 0.0 1.5 3.0

GDP 2987.2 2.2 2.0 2.0

GDP Mainland Norway 2347.2 2.3 1.7 2.2

Economic indicators 2014 2015 2016

Employment, % y/y 1.1 0.5 0.9

Labour force, % y/y 1.1 0.7 0.9

Unemployment (LFS), % 3.5 3.7 3.7

Annual wages, % y/y 3.4 3.0 3.3

Consumer prices, % y/y 2.1 2.8 2.0

Core inflation 2.5 2.8 2.1


Repo rate, % p.a. 1.25 1.00 1.00 1.00

2-yr swap yield, % p.a. 1.17 1.10 1.10 1.20

10-yr swap yield, % p.a. 1.74 1.80 2.00 2.20

EUR/NOK 8.64 8.50 8.25 8.15

USD/NOK 7.86 8.42 8.33 7.55

24/03/2015

Forecast

% y/y


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Finland

Elections ahead

We have largely kept our forecasts unchanged and expect Finnish

GDP to grow by 0.5% in 2015. The Finnish economy would have

grown without Russian sanctions and related uncertainty already in

2014. We continue to expect modest growth in exports on the back of

growth in the western markets, despite weak Russian demand.

The outlook for domestic demand continues to be lacklustre.

Household purchasing power remains weak due to unemployment and

a moderate wage agreement. Cheap petroleum is a rare positive factor.

Surveys point to weak expectations in retail trade and construction.

Manufacturing CAPEX is also weak. We expect the growth in exports

to fuel domestic demand also into modest growth in 2016.

Finland is preparing for parliamentary elections on 19 April 2015.

The election is of high significance, because the new government

inherits a weak economy, growing debt and a need to implement

several structural reforms, which the incumbent coalition

government failed to do. Continued failure to carry out reforms

could put Finland on a slow growth path and lead to a downgrade of

sovereign ratings.

At the moment it looks likely, albeit with a high degree of

uncertainty, that the new government will be a conservative one led

by the Centre Party. In this case, we would expect the government to

reduce public expenditure by EUR2-3bn, implement social and

health care reform, cut red tape from business and try to keep labour

cost inflation at low levels. This kind of tough love would curb

domestic spending in 2016, but boost the longer-term growth outlook.

Thanks to manageable debt levels and low interest rates, the poor

GDP figures have not translated into a full scale depression with

mass unemployment, bankruptcies and credit losses. Loan

performance has started to deteriorate recently, but from a very

strong position.

The housing market outlook is weak, and prices have decreased, but

no severe deterioration is in sight. Cautious supply of new housing

and low interest rates help to keep housing prices relatively stable.

Despite the rising debt level, weak growth outlook and slow pace of

reforms, Finland continues to enjoy one of the lowest risk premiums

compared to Germany. Relative to other euro countries Finnish

public finances are still among the best and the ECB’s expanded

asset purchase programme is large compared to the supply of bonds.

The Finnish economy contracted for the third year in a row in 2014, when

gross domestic product was 0.1 % smaller than in 2013. Gross domestic

product fell by 0.2 % q/q and down also by 0.2 % y/y in the fourth quarter of

2014. The economy is crawling well below potential output and the recovery


Source: Danske Bank Markets

% y/y 2015 2016 2015 2016

GDP 0.5 1.5 0.5 1.3

Private consumption 0.0 0.5 -0.2 0.5


Gross fixed investment -1.5 3.0 0.0 3.0

Exports 3.0 4.0 3.0 4.0

Imports 1.5 2.5 1.5 3.0

Unemployment rate 9.0 8.8 9.0 8.8

Inflation 0.3 1.0 0.9 1.2


Current account, % of GDP -1.2 -0.7 -1.0 -0.5

Finland



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in the euro area has not reached Finland yet. The situation has not improved

much in recent months. Industrial production and retail trade were down in

January. Exports to Russia and flow of tourists from Russia continue to fall.

The figures give a poor starting point for 2015. The few positive signs consist

of slowly growing new manufacturing orders (although new orders in metals

were down in January) and growing exports to Germany and the US. We

expect net exports to EU countries and the US to pull GDP on a positive

trend in 2015, but domestic demand is likely to remain stagnant. Lower

energy prices and a weaker euro support the Finnish economy, even if the

low prices are bad for the Russian economy and exports to Russia.

Figures for private consumption were weak during the fourth quarter. Private

consumption fell 0.5% q/q and was at 0.3% lower than a year earlier in the

same quarter. Investments were 5.7% lower y/y. Public consumption rose by

0.5% y/y, but these numbers are often revised significantly. In total, the 2014

figures for domestic demand paint a picture of cautious consumers facing

falling purchasing power and austere fiscal policy. Exports fell 0.4% y/y due

to decline in services exports. Goods exports rose 1.1% despite weakness in

Russia and other emerging markets. It is possible that exports to Russia fall

by as much as 50% over 2013-2015. Yet, a 5% increase in exports to the

Rest-of-the-World would boost total exports into positive territory already

this year. We expect the export markets in the EU and US to gain more

strength in 2015, especially if pent up demand for investment goods

continues to transform into new orders. Exports outside the euro area gain

from a weaker euro.

Leading indicators have stayed cautious or weakened lately. Consumer

confidence actually improved in February closer to a figure observed in

normal times, but consumers are pessimistic about employment and

disinterested in house or car purchases. Retail trade and construction

confidence are well below normal. Manufacturing confidence has been stable

in recent months.

Assuming that the US leads a global recovery and the euro area is also

gaining strength, we expect output to resume slow growth in 2015. We have

largely kept our growth estimate unchanged for both 2014 and 2015.

Although figures from January have been on the weak side of earlier

expectations, positive developments in the export market outlook are

strengthening. We forecast GDP to grow only 0.5% in 2015 and 1.5% in

2016.

Consumers in the doldrums

Private consumption has been weak for many years and fell further by 0.2%

in 2014. Households’ ability and willingness to consume are restricted by

many factors. Unemployment is high and, in particular, long-term

unemployment is rising. Real wage growth has been weak and taxes have

increased. These factors are reflected in the consumer confidence, which is

below the long-term average.

2015 has started with mixed figures. Retail sales dropped by more than 2% in

January and the number of new passenger cars registered tumbled by 12%

from January to February. But consumer confidence has been increasing for

five months (though the level is still low) supported by lower gasoline prices

and discounts in grocery stores.

New orders higher

Source: Macrobond

Inflation and wage growth continue to decline

Source: Macrobond


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The crisis in Ukraine and weaker Russian purchasing power have several

implications for Finland. Russians are by far the largest group of foreign

citizens visiting Finland as nearly 50% of foreign tourists came from Russia

in 2012. In particular, the retail trade, hotels and local service businesses in

Southeast Finland rely on Russian consumers. Most recent statistics indicate

that overnight stays by Russian tourists declined by 52% y/y in December

2014. The weak rouble has already cut purchasing power and the uncertainty

caused by the crisis spells trouble for industries relying on travellers from the

eastern border. Tourism income can also be harder to replace than exports of

goods, where companies are searching for new markets in other countries.

The outlook for private consumption in 2015 is bleak as consumer

confidence remains at low levels and purchasing power is set to be flat. Wage

growth is set to be subdued and the tax burden increased at the beginning of

2015. As a part of the austerity measures, the pension index rises only 0.4%

in 2015. We also expect consumer confidence to remain at mediocre levels at

best as employment figures continue to weaken in the next few months. Low

interest rates and low inflation will help to sustain activity. In February this

year, Finnish banks started to grant mortgage holders a year free-of-

repayments, which also supports consumption. We expect private

consumption to be flat i.e. increasing by 0.0% in 2015.

Exports the key issue for recovery

Among euro area economies, Finland is a rare example of a country that has

not seen much real growth in exports in three years. In October-December of

2014, the volume of exports rose 0.4% y/y despite being -1.0% smaller q/q.

Both goods exports have grown modestly, but the fall in services exports has

kept total exports relatively flat in recent quarters. The fall in services exports

may relate to Nokia’s disposal of its mobile phone business to Microsoft.

Exports of goods have suffered long-term damage from the decline of Nokia

and forest industries. Nokia phones are now gone and that impact is

disappearing. Exports have also suffered from a high share of investment

goods, which have been in short demand, falling demand for newsprint, and

poor price competitiveness caused by wage increases between 2008-2012. If

pent-up investment demand is released in Europe and Finland regains

competitiveness through wage moderation, exports could grow relatively fast

in the medium term. There exists a widespread drive to improve

competitiveness in order to preserve a strong manufacturing base in Finland.

Exports are seen as the best and only way out of the slump. Labour unions

have agreed to a very moderate wage rise in the medium run. Wages are set

to rise only 0.4% in 2015, plus some wage drift. Moderate wage agreements

are likely to be the norm also in 2016-2017. Thus, all bets are on goods

exports and not on domestic demand.


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The outlook for the main Finnish export markets in Germany has remained

relatively good and also other EU-countries have performed reasonably well.

Goods exports to Sweden fell in 2014, which may at least partly have been

caused by a weaker krona. The biggest risk to the export outlook continues to

be Russia. Exports to Russia failed to rise already in 2013, because the

Russian economy developed poorly. The crisis in Ukraine has caused

increasing tension in EU-Russian commercial relations and a weaker rouble

hit the Finnish export competitiveness in Russia. The value of Finnish

exports to Russia fell 14% in 2014 and we believe the worst is not behind us.

We expect Russian GDP and imports to fall significantly in 2015, which

keeps the export outlook poor.

Russia accounted for about 8.3% of Finnish goods exports in 2014 and 15%

of goods imports (oil and gas count a lot). Germany took over Russia’s

earlier position as Finland’s largest trading partner calculated by the value of

total cross-border trade, but trade relations continue to be close. Russia is an

important partner in many key sectors. The main export goods to Russia are

machinery and equipment, forestry- and chemical products as well as milk

and dairy products. Imports consist especially of energy, but also wood, iron

and steel are significant. Russian trade has been volatile in the past too. The

collapse of trade with Soviet Union was a major reason behind the Finnish

depression in the early 1990s. The Russian crisis in 1998 nearly halved

Finnish exports to Russia, but that time Finland did not suffer a recession,

because other exports performed well. This time it is again possible that

exports to Russia fall by as much as 50%, from peak to trough in 2013-2015,

but a 5% increase in exports to the Rest-of-the-World would boost total

exports into positive territory already this year.

Poor manufacturing confidence and low order book levels suggest that

exports are likely to continue to perform modestly at best in H1 15.

Assuming a continued recovery in the euro area and a brighter global

outlook, we expect exports to rise by 3% in 2015. The negative impact from

the Russian recession should abate in 2016, which should allow Finnish

exports to grow a little faster.

Finland had a current account surplus from 1994 to 2010, but fell with trade

balance into a small deficit in 2011. We expect a current account deficit also

in 2015-2016, driven by large net transfers. The trade balance has actually

been balanced, thanks to falling imports. The CA deficit is forecast to narrow

to 1.2% per GDP in 2015.

Uncertainty delays investment decisions

Investments were 5.1% lower y/y in 2014. In the fourth quarter, investments

fell by 5.7% y/y and 2.6% q/q. Housing construction investments fell by

5.5% in full year 2014, while the volatile machinery, equipment and transport

equipment investments sunk by over 10.7% y/y. After the new national

account system (ESA 2010), a new subsection was added to investments:

cultivated biological resources and intellectual property products, which

includes especially R&D activities. These expenditures are significant –

around the size of machinery, equipment and transport equipment

investments combined. R&D activities tend to be more stable over business

cycles, but these expenditures have suffered from Nokia-related cuts in recent

years. R&D recorded 1% drop in 2014. Thus, Finnish companies have cut

investment in all forms of capital.

Trade with Russia is volatile

Source: Macrobond

Germany has become the largest export market

Source: Macrobond


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Weakness in the construction sector was expected as building permits have

slipped already in 2013. Further reduction in construction activity looks

likely. The cubic volume of building permits granted for residential buildings

went down by 29% in October y/y. Building starts of residential buildings

decreased in October 2014 by 28% y/y. Construction confidence continues to

be exceptionally low. In manufacturing, the CAPEX outlook does not look

buoyant either. Uncertainty about growth outlook, the Russian situation and

government policies does not bode well for investments. Companies are

postponing investment decisions. Growth in exports could induce more

investment in 2016, however. Some large-scale investment plans were

released in 2014 – Metsä Group is to invest EUR1.1bn in a bio-product mill

and Stora Enso will spend EUR110m in its Varkaus factory, signalling a

positive turn in the forestry industry and in the economy in general. However,

these investments will have direct effects only after 2015.

We forecast investments to fall 1.5% in 2015, which would mark a fourth

consecutive year that fixed investments have shrunk. The last time

investments contracted for three successive years was in the early 1990s

recession. In 2016, increasing external demand and a recovery in the

construction sector is expected to turn investments into a 3% growth.

Sluggishness in the housing market

Prices for old dwellings in blocks of flats and terraced houses in Finland have

been slowly declining during 2014. Currently it seems that the prices are

slightly falling in several towns. In Q4 14 prices fell by -0.4% q/q and by -

1.0% y/y. According to the preliminary figures, house prices fell by 1.5 %

y/y in January. According to preliminary statistics, it also looks that the

number of property transactions came down slightly in 2014 and selling

times have increased accordingly. Due to the poor economic environment,

intentions to buy a dwelling decreased in H2 14.

Despite the above-mentioned headwinds, there are also factors pushing in the

other direction. The interest rate burden has stayed at record low levels

despite previous increases in bank lending margins. The debt-to-income ratio

of Finnish households, although it has been slowly increasing, is still well

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.

Also, the chronic lack of supply in growth centres, especially in the Helsinki

Metropolitan Area, supports the price level. As mentioned in the previous

segment, the outlook for newbuilding is subdued.

Housing market conditions remain uncertain for 2015. The demand side is

being squeezed due to unemployment increases and real wages stagnating.

The economic outlook is murky and the incentive to buy is falling as the

share of deductibility of housing loan mortgage interest for tax is declining

gradually to 50% until 2018. We expect nominal prices to slowly decline by

-1.0 % in 2015.

Despite the past price increases, we do not see excessive pricing in the

markets risking a housing market collapse, as prices have generally risen in

line with earnings. The price-to-rent ratio is signalling a similar picture. A

major decline in housing prices could be initiated only by much higher long-

term unemployment or surging interest rates, which both look unlikely

despite the lacklustre economic outlook.

Indicators suggest weak construction activity

Source: Macrobond

Housing prices in the Nordic countries

Source: Macrobond


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Elections in April

Finland is preparing for parliamentary elections on 19 April 2015. The

election is of high significance, because the new government inherits a weak

economy, growing debt and a need to implement several structural reforms,

which the incumbent coalition government failed to do. Continued failure to

carry out reforms could put Finland on a slow growth path and lead to

downgrade of sovereign ratings. A poor economic outlook combined with

structural issues relating to ageing are likely to lead to further austerity

measures.

The main parties in the ruling coalition government, conservative National

Coalition Party and Social Democratic Party, have lost popularity, according

to recent polls. Centre Party, a liberal party with agrarian roots, has risen to

the top of the polls and is expected to win the elections. The populist the

Finns Party is likely to lose some votes but to remain as one of the four large

parties.

At the moment it looks likely, albeit with a high degree of uncertainty, that

the new government will be a conservative government led by the Centre

Party. In this case, we would expect the government to reduce public

expenditure by EUR2-3bn, implement a social and health care reform, cut red

tape from business and try to keep labour cost inflation at low levels. This

kind of tough love would curb domestic spending in 2016, but boost the

longer-term growth outlook.

According to the budget, the net loan amount should increase by over

EUR5bn in 2015 compared to over EUR8bn in 2014. All in all, debt

continues to grow in the absence of growth. We forecast the debt ratio to

reach 61.5% by the end of 2015 even with the new method. Even if Finland

exceeds the 60% limit, it is unlikely to get into problems with the EU

commission.

Public spending is expected to stay nearly flat in the next few years. Even

though Finland is one of the least indebted euro area countries, the likelihood

of expansionary public finances continues to be low. Defence forces might

get more funding and few infrastructure projects are rare examples of

stimulus, while the total expenditures are likely to be cut.

Despite a rising debt level, weak growth outlook and a slow pace of reforms,

Finland continues to enjoy one of the lowest risk premiums compared to

Germany. Relative to other euro countries Finnish public finances are still

among the best and the ECB’s expanded asset purchase programme is large

compared to the supply of bonds. The 10-year bond yield was only 0.2% in

mid-March. Standard & Poor’s downgraded Finland to AA+ in October 2014

largely due to poor growth outlook and slow progress in economic reforms.

Finland has a triple-A rating from Moody’s and Fitch, but Fitch has changed

the outlook for Finland negative. But compared to other countries, Finland's

rating is still high in the euro area ranking. The next government should do

its part in stepping up the pace with the reforms, which would help to

maintain good ratings. Reforms in the production of public services and the

labour market are essential for sustainability of public finances and for

raising the long term growth potential. Bank of Finland economists have

recently estimated that without reforms potential growth could get stuck close

to 1% per annum.

Debt level inching up in the absence of growth

Source: Macrobond


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Official unemployment rate too rosy

The average unemployment rate rose in 2014 to 8.7 % compared to 8.4 % in

2013. In January this year the seasonally adjusted unemployment rate was

8.9% according to Statistics Finland. It is noteworthy that the unemployment

rate has increased quite modestly since the global financial crisis, even if the

economic development in Finland has been very poor. During the depression

in the early 1990s the unemployment rate rose to almost 20%.

However, the official figure understates the poor labour market conditions, as

many jobseekers have become discouraged and stopped looking for a job.

This can be seen in the shrinking labour force and the increasing share of

inactive population. Also, the number of registered unemployed at the

employment and economic development offices has continued to increase. In

addition, news of new lay-offs has been persistent and, according to surveys,

intentions to hire new workers are weak especially in retail trade. Declining

employment numbers, scarcity of new vacancies and limited wage pressures

indicate that the weakness is due to inadequate demand and not structural.

What is worrying is that the number of long-term unemployed has increased,

indicating that more and more unemployed have been without a job for at

least 12 months. For them it is harder to find a new job and many of them

will stay out of the workforce for ever.

We forecast the unemployment rate to stay around 9% in 2015. As the

economic and labour market conditions improve in 2016 and later, part of the

population now outside of the labour force will return to seek jobs, keeping

the unemployment rate over 8% for longer. The retirement wave which

started in 2010 is set to continue and the working age population to decrease

until the 2020s. This trend is likely to put a ceiling on the number of

employed persons and dampen the growth potential markedly.

Unemployment rate rising in Finland

Source: Macrobond


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Nordic Outlook

Finland: Forecast at a glance

Source: Danske Bank

National account 2013 2014 2015 2016

GDP -1.3 -0.1 0.5 1.5

Imports -1.6 -1.4 1.5 2.5

Exports -0.7 -0.4 3.0 4.0

Consumption -0.2 -0.1 0.0 0.3

- Private -0.6 -0.2 0.0 0.5

- Public 0.6 0.2 0.0 0.0

Investments -5.3 -5.1 -1.5 3.0


Unemployment rate, % 8.2 8.7 9.0 8.8

Earnings, % y/y 2.1 1.4 1.1 1.1

Inflation, % y/y 1.5 1.0 0.3 1.0

Housing prices, % y/y 1.6 -0.6 -1.0 1.5

Current account, EUR bn -3.6 -3.8 -2.5 -1.5

- % of GDP -1.8 -1.9 -1.2 -0.7

Public deficit, % of GDP -2.5 -3.4 -2.7 -1.5

Public debt/GDP, % of GDP 56.0 59.5 61.5 62.5


Repo rate, % p.a. 0.05 0.05 0.05 0.05

2-yr swap yield, % p.a. 0.10 0.05 0.05 0.05

10-yr swap yield, % p.a. 0.56 0.70 0.80 0.90

EUR/USD 1.10 1.01 0.99 1.08

Forecast

% y/y

24/03/2015


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Global overview

Consumers driving global recovery

The global economy is getting a boost from the decline in the oil price,

which puts more money in consumers’ pockets. We look for decent

global growth just below 4% this year, driven by private

consumption in OECD economies.

Especially the euro area stands out as a positive story after a couple

of challenging years. We look for growth of 1.6% this year with risk

to the upside. US growth is expected to be close to 3%, the highest

rate in 10 years.

The ECB continues with aggressive QE, while the Fed starts to raise

rates.

Emerging Markets is a mixed story with moderate growth in China,

potential in India, low growth in Brazil and steep decline in Russia.

The euro area is not often labelled the good story but now is one of those

times. The euro zone benefits from strong tailwinds thanks to a substantial

weakening of the euro, the sharp decline in the oil price, record-low bond

yields, a move to fiscal stimulus from fiscal austerity and a gradual thawing

of credit markets. Our models point to the strongest growth momentum since

the financial crisis started in 2008. We look for 1.6% growth this year and

2.1% in 2016.

The decline in the oil price has caused a general surge in consumer

confidence in OECD countries and a robust recovery in private consumption.

While the decline in the oil price has put many countries in deflation, it is

important to stress that it is the good kind of deflation that is driven by the

supply side through positive technology shifts. The improvement in fracking

technology has unleashed more global oil supply and since OPEC has

refrained from adjusting its production this has led to a collapse in the oil

price.

The US economy also feels the positive impact on consumption but not as

much as expected. The US economy is also affected by lower oil investments

and a marked appreciation of the USD, which has moderated growth a bit in

the past quarters. However, we believe the US economy will continue at

cruising speed just below 3%, leading to a further reduction in

unemployment. This will pave the way for the first rate hike from the Fed in

close to 10 years.

In contrast, the ECB launched an aggressive quantitative easing program

(QE), which will run at least over the next one and a half years. The clear

divergence in monetary policy is expected to drive a further weakening of

EUR/USD in coming quarters.

In Emerging Markets Russia stands out as the weakest link, as we expect a

very severe recession and more RUB weakness. Brazil is hurt by high

inflation and lack of reforms. On a more positive note, China is expected to

grow around 7% in line with its growth target and India has accelerated the

reform pace and fight against corruption, which gives rise to more optimism

for growth ahead.

Global GDP outlook versus consensus

Source: Bloomberg, IMF, Danske Bank Markets

Consumer confidence back to pre-crisis levels

Source: Macrobond Financial, Danske Bank Markets

Strongest euro retail sales in 10 years

Source: Macrobond Financial, Danske Bank Markets

% y/yD anske

B ank C o nsensus

D anske

B ank C o nsensus

USA 2.8 3.0 2.5 2.8

Euro area 1.6 1.3 2.1 1.6

Japan 1.2 1.0 1.4 1.4

China 7.2 7.0 6.8 6.7

Global 3.8 3.7 3.8 3.8

2015 2016


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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 2014 1.0 0.4 1.4 2.9 0.3 2.9 4.0 0.6 5.1 1.6 45.1 6.22015 1.7 1.6 0.7 2.5 0.0 3.3 2.8 0.7 4.8 -2.4 38.9 5.92016 2.1 2.0 0.2 3.9 0.0 4.9 4.6 1.7 4.6 -2.5 39.4 5.4

Sweden 2014 2.1 2.4 1.9 6.5 0.2 3.3 6.5 -0.2 7.9 -2.1 41.2 5.82015 2.4 2.0 1.2 6.0 0.0 5.5 6.6 0.3 7.7 -2.0 41.8 5.62016 2.3 1.8 1.5 3.8 0.1 4.9 5.1 1.2 7.5 -1.0 42.3 5.7

Norway 2014 2.3 2.1 2.5 1.2 0.4 1.7 1.6 2.1 3.5 - - -2015 1.7 1.8 2.4 -6.5 -0.1 2.5 1.0 2.8 3.7 - - -2016 2.2 2.0 2.2 1.0 0.0 1.0 3.0 2.0 3.7 - - -

Macro forecast, Euroland

Euroland 2014 0.9 1.0 0.7 1.0 -0.1 3.7 3.8 0.4 11.6 -2.6 92.7 2.52015 1.6 1.8 0.8 2.0 0.0 4.5 4.1 0.1 11.0 -2.3 92.8 2.62016 2.1 1.1 0.7 5.4 0.0 4.2 4.1 1.5 10.4 -1.9 91.5 2.5

Germany 2014 1.6 1.2 1.1 3.4 -0.1 3.8 3.3 0.8 5.0 0.2 74.5 7.12015 2.3 2.4 1.1 3.0 0.0 5.7 5.3 0.2 5.0 0.0 72.4 7.12016 2.6 1.6 0.8 6.8 0.0 4.9 5.3 2.0 4.7 0.2 69.6 6.7

France 2014 0.4 0.6 1.9 -1.6 -0.1 2.7 3.8 0.6 10.2 -4.4 95.5 -1.92015 0.7 1.1 1.0 -0.7 0.0 4.6 4.2 0.0 10.4 -4.5 98.1 -1.92016 1.0 0.8 0.4 3.1 0.0 3.4 4.0 1.3 10.2 -4.7 99.8 -2.2

Italy 2014 -0.4 0.3 -0.9 -3.2 0.3 2.4 1.6 0.2 12.7 -3.0 132.2 1.52015 0.5 0.8 0.5 -0.7 0.0 4.3 2.6 0.0 12.6 -2.7 133.8 1.52016 1.4 0.7 0.4 3.4 0.0 4.3 3.8 1.4 12.4 -2.2 132.7 1.8

Spain 2014 1.4 2.4 0.1 3.4 -0.1 4.2 7.6 -0.2 24.5 -5.6 98.1 0.52015 2.4 2.7 -0.7 5.3 0.0 5.1 5.8 -0.7 23.2 -4.5 101.2 0.72016 2.6 1.9 0.4 6.8 0.0 4.5 4.9 1.3 21.7 -3.7 100.6 0.9

Finland 2014 -0.1 -0.2 0.2 -5.1 - -0.4 -1.4 1.0 8.7 -3.4 59.5 -1.92015 0.5 0.0 0.0 -1.5 - 3.0 1.5 0.3 9.0 -2.7 61.5 -1.22016 1.5 0.5 0.0 3.0 - 4.0 2.5 1.0 8.8 -1.5 62.5 -0.7

Macro forecast, Global

USA 2014 2.4 2.5 -0.2 5.3 0.1 3.1 4.0 1.6 6.2 -4.1 101.0 -2.32015 2.8 3.4 1.2 4.5 0.0 1.1 3.7 0.1 5.2 -2.9 104.0 -2.52016 2.5 2.7 0.9 5.2 0.0 3.7 4.9 2.4 4.6 -2.6 103.0 -2.6

Japan 2014 -0.1 -1.3 0.3 2.6 0.2 8.2 7.2 2.4 3.6 -8.1 245.0 0.32015 1.1 0.1 1.2 0.0 0.0 7.6 3.8 1.1 3.5 -6.7 245.0 1.02016 1.4 1.4 1.2 0.9 0.2 6.3 6.2 1.6 3.3 -6.3 246.0 1.1

China 2014 7.4 - - - - - - 2.0 4.3 -1.1 40.7 1.82015 7.2 - - - - - - 2.2 4.2 -0.8 41.8 2.42016 6.8 - - - - - - 2.7 4.2 -0.8 42.8 2.3

UK 2014 2.6 2.1 1.5 6.8 -0.2 0.4 1.8 1.5 6.2 -5.4 88.7 -4.82015 2.8 2.5 0.7 6.1 0.0 2.4 3.9 0.1 5.5 -4.6 90.1 -4.32016 2.8 2.3 -1.0 7.5 0.0 4.7 4.7 1.5 5.3 -3.6 91.0 -3.6

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 24-Mar - 678.9

+3m - 737.5

+6m - 752.4+12m - 689.7

EUR 24-Mar 109.9 745.9

+3m 101.0 744.9

+6m 99.0 744.9+12m 108.0 744.9

JPY 24-Mar 119.5 5.68

+3m 125.0 5.91

+6m 125.0 5.96+12m 127.0 5.44

GBP 24-Mar 149.6 1015.1

+3m 144.0 1064.1

+6m 146.0 1095.4+12m 152.0 1049.2

CHF 24-Mar 96.0 707.0

+3m 104.0 709.4

+6m 108.1 696.2+12m 101.9 677.2

DKK 24-Mar 678.9 -

+3m 737.5 -

+6m 752.4 -+12m 689.7 -

SEK 24-Mar 847.9 80.1

+3m 910.9 81.0

+6m 919.2 81.9+12m 824.1 83.7

NOK 24-Mar 786.0 86.4

+3m 841.6 87.6

+6m 833.3 90.3+12m 754.6 91.4

Equity Markets

Regional

Price trend12 mth.

Regional recommen-dations

USA (USD) Strong earnings growth, expensive valuation 5-8% Neutral

Emerging markets (local curr) Commodity-related equities are pressured 0-5% Underweight

Japan Reflation, earnings growth, fair valuation 5-10% Overweight

Europe (ex. Nordics) Reflation, multiple expansion, attractive valuation 10-15% OverweightNordics Earnings growth, fair valuation 5-10% Overweight

Commodities

Average

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016

NYMEX WTI 49 57 65 71 72 72 73 73 61 73

ICE Brent 54 62 70 76 77 77 78 78 66 78

Copper 5,750 5,750 6,000 6,250 6,400 6,550 6,700 6,850 5,938 6,625

Zinc 2,100 2,100 2,150 2,200 2,225 2,250 2,275 2,300 2,138 2,263

Nickel 14,500 14,500 15,500 16,500 17,000 17,500 18,000 18,500 15,250 17,750

Aluminium 1,800 1,800 1,875 1,950 2,000 2,050 2,100 2,150 1,856 2,075

Gold 1,215 1,205 1,195 1,185 1,175 1,175 1,175 1,175 1,200 1,175

Matif Mill Wheat (€/t) 190 195 199 201 202 204 206 208 196 205

Rapeseed (€/t) 365 375 382 386 389 393 396 400 377 395

CBOT Wheat (USd/bushel) 545 555 560 565 570 575 580 585 556 578

CBOT Corn (USd/bushel) 395 405 410 415 420 425 430 435 406 428CBOT Soybeans (USd/bushel) 1,050 1,070 1,080 1,090 1,100 1,110 1,120 1,130 1,073 1,115

Medium

Medium

Medium 0-8%

Medium 0-5%

0-5%

0-5%Medium 0-5%

979

526

0.56

1.051.15

1.81

1.80

2.00

2.302.50

0.15

-

--

2.20

0.951.10

0.85

0.89

1.05

0.78

0.70

0.800.90

-

--

1.58

2.10

0.52

393

24-Mar

48

14,300

6,120

2,086

1,190

193

55

1,798

20162015

Currencyvs EUR

2-yr swap yield

Risk profile3 mth.

Price trend3 mth.

2.50

2.00

2.65

0.84

0.10

0.16

0.84

-0.67

0.13

0.05

0.050.05

1.50

73.5

2.85

68.071.0

105.0

107.0110.0

101.0

99.0108.0

126.0

125.0137.0

109.9

-

-

--

131.3

744.9

744.9744.9

931.7

863.6

815.0

920.0

825.0

910.0890.0

850.0

105.5

745.9

70.0

1.20

0.00

1.171.46

1.00

-0.10

1.852.35

1.30

1.601.95

-

-

1.10

0.00

-0.20

1.10

0.10

0.100.10

-

--

-0.05

0.00

-0.10

10-yr swap yield

-0.07

0.05

0.050.05

3m interest rate

1.00

0.05

0.10

0.50

-0.75

0.05

0.00

0.65

0.841.26

1.00

1.00

1.00

-0.85-0.85

-0.25

0.10

-0.15

Key int.rate

0.25

0.50

0.501.00

1.00

-0.85

0.05

0.05

0.100.10

0.50

1.25

-0.30

1.00

-0.30-0.30

0.05

0.75

0.27

0.02

0.10

0.57

370

-0.10

-0.79

-

--

-0.20

-0.20

-0.20

0.68

0.951.52

0.00

0.00

0.20

0.15


No

rdic O

utlo

ok

Nordic Outlook

Disclosures

This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S (‘Danske Bank’). The authors of this research report are listed on page 2.

Analyst certification

Each research analyst responsible for the content of this research report certifies that the views expressed in this research report accurately reflect the research analyst’s

personal view about the financial instruments and issuers covered by the research report. Each responsible research analyst further certifies that no part of the compensation

of the research analyst was, is or will be, directly or indirectly, related to the specific recommendations expressed in the research report.

Regulation

Danske Bank is authorised and subject to regulation by the Danish Financial Supervisory Authority and is subject to the rules and regulation of the relevant regulators in all

other jurisdictions where it conducts business. Danske Bank is subject to limited regulation by the Financial Conduct Authority and the Prudential Regulation Authority

(UK). Details on the extent of the regulation by the Financial Conduct Authority and the Prudential Regulation Authority are available from Danske Bank on request.

The research reports of Danske Bank are prepared in accordance with the Danish Society of Financial Analysts’ rules of ethics and the recommendations of the Danish

Securities Dealers Association.

Conflicts of interest

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 Danske Bank’s research policies. Employees within Danske Bank’s Research Departments have been instructed that any request that

might impair the objectivity and independence of research shall be referred to Research Management and the Compliance Department. Danske Bank’s Research Departments

are organised independently from and do not report to other business areas within Danske Bank.

Research analysts are remunerated in part based on the overall 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.

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 on request.

Risk warning

Major risks connected with recommendations or opinions in this research report, including a 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.

Date of first publication

See the front page of this research report for the date of first publication.

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 that Danske Bank considers to be reliable. While 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.

The opinions expressed herein are the opinions of the research analysts responsible for the research report and reflect their judgement as of the date hereof. These opinions

are subject to change and Danske Bank does not undertake to notify any recipient of this research report of any such change nor of any other changes related to the

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U.S. Securities and Exchange Commission and may not be subject to the reporting and auditing standards of the U.S. Securities and Exchange Commission.

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

N o r way

C h i e f A n a l y s t & H e a d of F r a n k J u l l u m+ 4 7 8 5 4 0 6 5 4 0f j u @ d a n s k e b a n k . n o

F i N l a N d

C h i e f A n a l y s t & H e a d of P a s i P e t te r i K u o p p a m ä k i+ 3 5 8 1 0 5 4 6 7 7 1 5p a k u @ d a n s k e b a n k . c o m

H e n n a P ä i v i k k i M i k ko n e n + 3 5 8 1 0 5 4 6 6 6 1 9h m i @ d a n s k e b a n k . c o 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 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 3 2 0 2 1p 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 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

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

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

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

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

H a n s R o a g e r J e n s e n+ 4 5 4 5 1 3 0 7 8 9h r o a @ 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

F x & c o M M o d i t i e s s t r at e g y

G l o b a l H e a d of F I C C R e s e a r c hT h o m a s H a r r+ 4 5 4 5 1 3 6 7 3 1th h a r @ 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

M o r te n T h r a n e H e l t+ 4 5 4 5 1 2 8 5 1 8m o h e l @ 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

K r i s tof f e r K j æ r L o m h o l t+ 4 5 4 5 1 3 7 8 6 7k l o m @ d a n s k e b a n k . d k

d c M 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

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

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 8 5 6 8 8 0 6 0 2g a b e @ d a n s k e b a n k . s e

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

L a r s H o l m+ 4 5 4 5 1 2 8 0 4 1l a h o @ d a n s k e b a n k . d k

Å s e H a a g e n s e n + 4 7 2 2 8 6 1 3 2 2h a @ d a n s k e b a n k . c o m B j ø r n K r i s t i a n R ø e d+ 4 7 8 5 4 0 7 0 7 2b r e d @ d a n s k e b a n k . co m

Wi v e c a S w a r t i n g+ 4 6 8 5 6 8 8 0 6 1 7w s w @ d a n s k e b a n k . c o m

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

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

N i k l a s R i p a+ 4 5 4 5 1 2 8 0 4 7n i r i @ d a n s k e b a n k . d k

O l a A a s n e s s H e l d a l+ 4 7 8 5 4 0 8 4 3 3 o l h @ d a n s k e b a n k . n o

H e n r i k R e n è A n d r e s e n + 4 5 4 5 1 3 3 3 2 7h e n a @ d a n s k e b a n k . d k

S o n d r e D a l e S to r m y r + 4 7 8 5 4 0 7 0 7 0s o s t @ d a n s k e b a n k . co m

Ø y v i n d M o s s i g e + 4 7 8 5 4 0 5 4 9 1o m s s @ d a n s k e b a n k . co m

K n u t - I v a r B a k k e n + 4 7 8 5 4 0 7 0 7 4k n b @ d a n s k e b a n k . co m

E m i l H j a l m a r s s o n+ 4 6 8 5 6 8 8 0 6 3 4e m i h @ d a n s k e b a n k . s e

d e N M a r k

C h i e f E c o n o m i s t & H e a d of 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

M i k a e l O l a i M i l h ø j+ 4 5 4 5 1 2 7 6 0 7m i l h @ 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 @ d a n s k e b a n k . 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 @ d a n s k e b a n k . 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 @ d a n s k e b a n k . 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 @ d a n s k e b a n k . 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 @ d a n s k e b a n k . 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 @ d a n s k e b a n k . s e

S u s a n n e P e r n e b y+ 4 6 8 5 6 8 8 0 5 8 5s u p e @ d a n s k e b a n k . s e

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

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

R o k a s G r a j a u s k a s+ 3 7 0 5 2 1 5 6 2 3 1r g r a @ d a n s k e b a n k . l t

Documents

Economic and financial trends - Danske Bank · monetary policy is not quite so expansive – though the steep decline in oil ... extraordinarily low interest rates have any consequences