Sweden, Norway to Raise Rates as Growth Returns, Danske Says
Sweden’s Riksbank will raise its main rate by a quarter point in December to 1.25 percent, the Copenhagen-based lender said today. Norway’s central bank will wait until March 2014 to boost its deposit rate by 25 basis points to 1.75 percent, while Denmark’s key rate will be 20 basis points higher at 0.5 percent in a year, Denmark’s biggest bank predicted.
“We feel that the economic key should be set to change from minor to major,” Danske said in a report today. “For the first time in many years we also see some upside risks” from a stronger U.S. housing market, an improved financial market sentiment and loose monetary policy, the bank said.
Consumer spending will drive the economic expansion across the three Scandinavian countries in 2013. Danske estimates that Norwegian gross domestic product excluding oil and shipping will advance 2.8 percent, while Swedish output will be 1.7 percent and Danish growth is seen at 0.4 percent.
Danske cut its forecast for the Finnish economy to expand 0.3 percent this year from a previous 0.5 percent forecast. The 2014 outlook was cut to 2 percent from 2.2 percent. The Finnish and Danish economies both contracted in 2012.
The global economy will expand 3.6 percent this year and 4 percent in 2014 as growth accelerates in the U.S., China and Japan and the euro crisis abates, helping Nordic exports, the bank said.
“The main risk is still a renewed flare-up of the euro crisis which could be triggered by a severe slowdown in France or chaos in Italy and Spain,” Danske said. “But the probability of such a development has been reduced by the ECB’s back-stop” and years of fiscal consolidation in Europe.
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