We head into the last four months of 2018 with more than a few storm clouds brewing. The China-US trade war shows little sign of abating, emerging-market currencies are braced for yet more turmoil and Brexit looms like the sword of Damocles threatening to plunge Europe into perhaps its greatest period of uncertainty since the collapse of the Soviet Union.
But is the picture quite so bleak? Not according to Nordea’s analysts who, at least from a Nordic perspective, see considerable room for optimism. The catalyst for that as for so many things in this corner of the world is Germany.
Germany’s economy is firing on most if not all cylinders, sending the country’s unemployment levels to post-reunification lows and spilling over into wages. For the Nordics, the ripple effect is tangible.
The German pull is most likely to be felt in Denmark and Sweden where the linkage is most obvious. As for Norway and Finland, the influence of the German dynamo may be less pervasive but there will be an indirect benefit. Norwegian wage growth is, nevertheless, likely to outperform, underpinned by domestic considerations, while Finland can anticipate some moderate wage rises.
Wages growth does of course raise the spectre of inflation but any such fears are probably a red herring at this stage. The suppression of wage growth over the last decade has been such that any rise is welcome and still falls well within the parameters of longer-term expectations.
Read more in our latest issue of Nordea Economic Outlook, an overview of the Nordic and global economies, including fresh economic forecasts and risk scenarios.
And watch a webinar with our economists. Get an insider view when our experts present the main findings and take questions from participants.
Report and webinars
Report in English: download
Webinar recording in English: watch
Report in Danish: download
Webinar recording in Danish: watch
Report in Finnish: download
Webinar recording in Finnish: watch
Report in Norwegian: download
Webinar recording in Norwegian: coming soon
Report in Swedish: download
Webinar recording in Swedish: watch
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