The Nordic region will avoid a recession, led by growth in Norway and Iceland as consumers and investments buoy an expansion amid sliding exports.
Growth in the largest Nordic economy, Sweden, will slow to 0.6 percent this year from 4 percent in 2011, while Finnish output will abate to 0.9 percent and an expansion in Denmark will recede to 0.8 percent, the Paris-based group said. Growth in mainland Norway will accelerate to 2.7 percent and Iceland’s expansion will reach 3.1 percent.
“The stance of monetary policy ought to remain accommodative,” the OECD said of Sweden. “Thanks to steadfast fiscal discipline in the past, Sweden now has room for discretionary stimulus, which might be warranted if growth turns out to be significantly weaker than expected.”
The region is withstanding a potential recession in the 17- member euro bloc as fiscal health allows the countries to largely avoid the austerity that is sapping growth in southern Europe. The Nordic countries, with the exception of Finland, are all outside the euro area.
Swedish unemployment will rise to 7.6 percent this year from 7.5 percent in 2011, and increase to 7.9 percent from 7.8 percent in Finland, the OECD forecast. The Danish jobless rate will rise to 7.6 percent from 7.4 percent, it said. In Norway, unemployment will hold at 3.3 percent.
Norwegian economic growth is picking up as it benefits from being the world’s seventh-largest crude exporter, the OECD said. Iceland’s economy will grow as the smallest Nordic country recovers from a 6.8 percent slump in 2009 after its banks defaulted on $85 billion in 2008.
Growth will accelerate in the four largest Nordic countries next year, the OECD said. Swedish growth in 2013 will be 2.8 percent, Finland will expand 2.0 percent, Denmark 1.4 percent, mainland Norway, which excludes oil and gas production, will grow 3.6 percent. Iceland will expand 2.7 percent.
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