The Nordic region’s four largest economies will outperform the euro area and the U.K. this year as they cope better with the fallout from the European debt crisis, Morgan Stanley forecast.
Norway, Sweden, Denmark and Finland will grow by a weighted 1.5 percent this year, led by Norway, economists Tomasz Pietrzak and Elga Bartsch said in a note to clients today. Norges Bank is likely to be the first central bank to raise policy rates in western Europe. The bank will increase the rate in September and December, bringing it to 2 percent by year end to rein in private-sector debt growth.
Sweden’s Riksbank will probably keep its main lending rate unchanged at 1 percent this year as economic growth accelerates to 1.4 percent in 2013 from 0.8 percent last year, the bank said. Finland and Denmark will return to growth of 0.2 percent and 1 percent, respectively, after both contracted last year. Norway’s mainland economy, which excludes oil, gas and shipping, will expand 3.4 percent this year and 3.9 percent in 2014.
The 17-nation euro-area is struggling with soaring unemployment amid a recession as governments cut spending to reduce debt. Sweden is posting almost balanced budgets, and Norway, which isn’t a member of the European Union, has no net debt. Finland is the only Nordic country to use the euro.