Household spending is helping Nordic economies weather weak export demand as the euro area suffers through a second year of recession, the European Union said.
“Resilient” consumers helped Sweden avoid a recession last year and domestic demand remains the “main growth driver” in Finland, according to a report published today by the EU’s executive body in Brussels. “Exports are expected to pick up in the second half of 2013 when growth in Swedish export markets is projected to resume.”
Spending cuts and tax increases are weighing on economic growth as European governments work their way toward budget balance. A return of confidence on the financial markets is strengthening optimism, and economic growth next year will boost demand for the goods of export-reliant Nordic nations.
Sweden’s economy will expand 1.3 percent this year and 2.7 percent in 2014 after growing 1 percent in 2012, the EU forecast. Finland’s gross domestic product will increase 0.3 percent and 1.2 percent this year and next, respectively. The Danish economy is seen growing 1.1 percent in 2013 and 1.7 percent in 2014, the EU said.
Sweden’s budget shortfall will widen to 0.9 percent of GDP this year before narrowing to 0.2 percent in 2014, while Finland’s government will face a gap of 1.5 percent of GDP this year. The Danish deficit will be 2.7 percent in 2013 and 2.8 percent in 2014.
Public debt will be below the EU average in the Nordic region’s countries, led by Finland with 56.4 percent of GDP, Denmark with 45.9 percent of GDP and Sweden with 37.3 percent of GDP. Euro-area nations have average debt of 95.1 percent and the 27 members of the union have average debt of 89.9 percent.
Iceland, which is seeking EU entry, will grow 2 percent this year and 2.7 percent in 2014, the commission said.
Sweden and Denmark are EU members with their own currencies, while Norway hasn’t joined the union. Finland is the only Nordic country using the euro.
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