Danske Bank has lowered its growth expectations for the Nordic region, warning that Denmark’s economic outlook is under unusual strain due to difficulties at pharmaceutical giant Novo Nordisk.
In its latest Nordic Outlook, the bank said that Novo’s outsized role in Danish exports, corporate earnings and equity markets has left the country more vulnerable than its neighbours. Supply bottlenecks, regulatory hurdles and softer demand growth for its best-selling treatments are weighing on Novo’s performance — and by extension on Denmark’s growth prospects. “Denmark’s reliance on one corporate champion is both a strength and a risk,” the bank’s economists cautioned.
Sweden: Slow recovery amid weak households
For Sweden, Danske sees a fragile recovery. While inflation is easing and exports are stabilising, high interest rates continue to squeeze households and dampen domestic demand. The housing market remains under pressure, though early signs of stabilisation suggest the worst may be over. GDP growth is expected to remain subdued well into 2025.
Finland: Exports stabilise, but headwinds persist
Finland shows slightly stronger momentum, supported by improving export orders and manufacturing activity. However, sluggish private consumption and weak construction activity continue to hold back overall growth. Structural challenges in productivity and competitiveness remain on the agenda for policymakers.
Norway: Energy cushions the blow
Norway continues to benefit from elevated energy revenues, which support both fiscal stability and the krone. Oil and gas exports provide a cushion against global uncertainty, while government spending from the sovereign wealth fund helps sustain domestic demand. Still, high interest rates and global market volatility are slowing private investment.
Regional perspective
Taken together, the Nordics face a period of weaker momentum than previously forecast, with external uncertainty, geopolitical risks and tight monetary policy creating a difficult environment. Yet the report stresses that the region’s resilience — in terms of strong public finances and competitive industries — remains intact.
Denmark, however, stands out as the outlier: its economic narrative is now closely tied to Novo Nordisk’s fortunes, making its growth trajectory unusually dependent on a single company’s ability to overcome near-term challenges.
Source: Danske Bank, Nordic Outlook, 3 September 2024.
