Housing Market and Credit Assessment
Nordic economies
Interest rates to rise throughout the Nordics
Policy rates
Public balance/debt, % of GDP, 2022E
3.0
3.0
1-
%
Policy rates
%
Denmark
2022E
Norway
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
Fiscal Balance, % of GDP
-0.5
-0.5
-1.0
-1.0
0 1 2 3 4 5
6
►
O
0
Sweden
-1
Germany
Finland
-2
Netherlands
Portugal
-3
Belgium
Italy
-4
Ireland
Austria
United Kingdom
China
Spain
-5
-6
France
United States
-7
11
12
13 14
15
16
17
18
19
20
21
22
23
30 40
50
Sweden
Norway
Euro Area Denmark
60 70 80 90 100 110 120 130 140 150 160
General Government Gross Debt, % of GDP
Source: IMF World Economic Outlook, Nordea and Macrobond.
•
Central banks around the Western world are beginning to tighten monetary policy to combat the high inflation. Norges Bank has hiked their rate three
times since last fall and is expected to continue with a total of seven more hikes this year and next. The Swedish Riksbank is expected to hike rates three
times this year, while we predict one rate hike in late 2022 and two more in 2023 in the Euro Area and Denmark.
The Riksbank and ECB launched new large-scale asset purchase programmes (QE) as a response to the COVID-19 crisis. The ECB is expected to stop
increasing its balance sheet this year, while the Riksbank is expected to begin decreasing its balance sheet.
Solid public finances enabled the Nordic governments to act swiftly during the pandemic. With government debt still lower than in most Western
countries, the Nordics are relatively well-equipped to handle the potential slowdown that might result from higher interest rates as well as supply issues
and risk aversion due to the war in Ukraine.
20
Source: Nordea Markets and Macrobond
NordeaView entire presentation