Mixed outlook for Nordic economies – DNB, Handelsbanken

Leading indicators point to continued positive performances by the Norwegian and Finnish economies, but Sweden may lag, according to Norway’s DNB and Sweden’s Handelsbanken.

DNB reported today that its analysis of last Friday’s consumer confidence index figures (ForbrukerMeteret) pointed to a return of confidence in household finances. The index rose to 4 from 2.3 in January – the second consecutive monthly increase. December 2011 was the weakest month since the end of 2008.

Norwegian households are becoming less fearful of unemployment, which could feed through to increased consumption in 2012. In turn this suggests that the country’s central bank Norges Bank may not cut its key interest rate at its next monetary policy meeting, DNB said.

Handelsbanken Capital Markets reported improved consumer confidence in Finland. The index there jumped to 8.3 in February, from 3.4 in January and 0.4 in December. It still stands below the long term average of 13.

As in Norway, Finnish consumers became slightly more confident because of the outlook for the domestic employment market generally, but with caveats about the country’s overall economic strength.

“Saving was still considered more worthwhile than purchasing durable goods or raising a loan,” Handelsbanken said about the latest index results.

Concerns remain over Swedish GDP figures for the last quarter of 2011 expected on Wednesday, the bank added.

“We forecast Swedish GDP in Q4 at -0.9%/2.6 % (quarter-on-quarter/year-on-year). So, the GDP growth slowdown that has been in place since early 2011 continues. After the surprisingly strong Q3 reading (1.6%/4.6% q-o-q/y-o-y), we expect a significant recoil.”

Export trade and inventory levels will have played an important role in the strength of the economy in the last quarter, the bank said.

“Also expected to drag down GDP in Q4 is the impact from inventories. We forecast impact of the same magnitude as that from net exports (i.e. -0.6%) but this component is highly uncertain. The anticipated inventory swing we earlier though would weigh more on preceding 2011 quarters will most likely also affect GDP negatively further on in 2012 (besides the forecast impact on Q4 in 2011). The timing of these effects is frankly unclear. With the inventory-driven GDP Q4 decrease, an inevitable hit to labour productivity follows.”


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