By Stine Jacobsen
COPENHAGEN (Reuters) – Post-pandemic reopenings are boosting the economic recovery of Nordic economies as consumers prepare to splurge using savings that have risen to record highs during the COVID-19 outbreak, a Reuters poll of economists suggested.
Sweden and Norway are each set for expansion of 3.5% or more in 2021 and 2022, according to the July 5-8 survey, as the gradual return to normal life is increasing in tandem with more people getting vaccinated https://graphics.reuters.com/world-coronavirus-tracker-and-maps/vaccination-rollout-and-access.
“There are of course still risks related to COVID-19, but with vaccinations progressing, we expect the recovery to continue and to have the economies back to their potential output and pre-crisis unemployment in 2022,” Danske Bank said in a note.
Sweden’s gross domestic product was expected to grow 3.6% this year and 3.5% next year, above the 3.3% and 3.4% economists forecast in April, the poll showed.
“Households are optimistic about their own economy, households’ financial wealth is through the roof, the housing market is hot and restrictions are eased,” Nordea wrote in a note.
“Coupled with strong global demand, our GDP forecast at 4.5% for FY 2021 is still in play,” it said.
REOPENINGS ON TRACK BUT STILL VULNERABLE
Norway’s GDP was seen expanding 3.5% this year and next, below the previous forecast for 2021 of 3.7% growth but above the 3.1% previously forecast for next year.
Confidence was further boosted on Wednesday with Norwegian monthly core GDP estimated at 1.8% in May, beating expectations in a Reuters poll for 0.9%.
“The larger-than-expected rise in mainland Norwegian GDP in May indicates that the economy is back in business following the lifting of restrictions, and it is likely to have regained its pre-virus level in June,” Capital Economics said in a note.
“We clearly underestimated Norwegian consumers’ desire to splash the cash, particularly on clothing and footwear, and the 4.9% month-on-month surge in total spending was the fastest since June 2020,” it added.
The Nordic region has so far dodged the worst economic fallout from the pandemic, and despite big differences in COVID-19 strategies, the path towards full reopenings is clear but still fragile.
Earlier this week, Norway announced the easing of some COVID-19 restrictions but at the same time delayed the final phase of reopening the economy until the end of this month at the earliest because of concerns about the Delta coronavirus variant.
Danish growth was seen at 3.0% in 2021, in line with the April forecast. Denmark’s GDP growth was expected to accelerate to 3.5% next year, slightly above the 3.4% previously forecast.
Denmark’s central bank said last month it expects the economy to enter a “moderate boom” this year and the next, buoyed by strong private demand and high savings accumulated during the pandemic.
“As expected, Danes were happy to return to previously closed businesses, and while certain segments of the service industry are still waiting for a return to full capacity, the signs are also pointing in the right direction here,” Danske Bank said.
(For other stories from the Reuters global economic poll)
(Reporting by Stine Jacobsen in Copenhagen, Gwladys Fouche in Oslo and Johan Ahlander in Stockholm; Polling by Vivek Mishra in Bengaluru; Editing by Matthew Lewis)
