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Nordic Outlook May 2023

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The United States and the euro area will enter a mild recession this year, followed by only a moderate recovery in 2024, write SEB's economists in a new issue of Nordic Outlook. 

The economists’ introduction

There are more and more signs that high inflation is finally coming down. Energy, commodity, transport and input prices have fallen.But recently, signs of a slowdown have become more evident and the central banks’ balancing act between inflation and recession risks has become more difficult.

New playing field as both inflation and growth fall

The Euro area

Resilience, especially in the service sector, will help to keep the expected recession relatively mild. Despite increased financial sector turmoil, the European Central Bank will hike key rates in three more 25-basis point increments at upcoming meetings.

Euro area: Core inflation keeps the ECB in hiking mode

China

Because of China’s accelerating, consumer-driven recovery, we are raising our 2023 GDP growth forecast to 5.9 per cent. Meanwhile lingering fragility in the property sector is weighing on capital spending.

China: Consumption recovery kicks in

Sweden

Swedish growth will be among the weakest in the EU in 2023. Inflation rose far faster than expected early this year, and we believe the Riksbank will hike its key rate one last time to 3.75 per cent in June, with the first rate cut coming in April 2024.

Sweden: Resilient, but downside risks remain

The inflation dynamic

Energy and commodity prices have fallen but continue to rise at the producer and consumer levels. Signs of a slowdown in price hikes at the producer level increase the likelihood that inflation at the consumer level is also about to fall.

Long lead times and shifting drivers in the inflation factory

What is Nordic Outlook report?

Our macroeconomic flagship report Nordic Outlook contains our economists' views on economic developments in the world. You will find key forecasts as well as an analysis of trends and political decisions that affect the world economy.

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