Danske cuts 2022 Nordic GDP forecasts

Bloomberg

Danske Bank lowered forecasts for next year’s economic growth across the Nordics, as supply chain constraints and labour shortages could impede the region’s rebound.
“The lack of supply of materials and equipment is a limitation for many Nordic businesses,” Danske said in its Nordic Outlook report. “We expect these constraints to ease as global demand swings back towards services, but that process has been further delayed by the Omicron variant of Covid-19.”
At the same time, the bank noted that strong demand at home as well as abroad is boosting the growth of the Nordic economies, and believes the expansion will only be slightly slowed as governments impose new restrictions to curb an omicron-fuelled surge in Covid cases. In Denmark, Danske now sees 2021 GDP growth of 3.8% versus previous forecast of 4.0%; 2022 growth outlook is lowered to 2.5% from 3.0% earlier.
The tight labour market is set to be “a dominant theme in the coming years,” as a pronounced upswing has almost drained available resources and wages look set to climb.
Still, says “a general overheating of the Danish economy similar to that prior to the financial crisis is a long way off.”
In Sweden, the bank raised 2021 calendar-adjusted GDP growth to 4.5% from previous forecast 3.9%; 2022 forecast is cut to 3.0% from 3.5%. Danske notes that while growth has been stronger than expected, new Covid restrictions, continued supply chain problems and record-high electricity prices are near-term headwinds.
The bank said in Norway, 2021 GDP growth is seen at 4.0% versus previous forecast 3.8%; 2022 forecast is lowered to 3.8% from 4.0%. The bank said high capacity utilisation means that growth in several sectors is being constrained from the supply side.
While rising infections and uncertainty about the new omicron variant have reduced mobility and led to new restrictions, this is mainly hitting hospitality and culture, which account for just 3% of the economy so the impact will be fairly limited.
For Finland, Danske last month raised its growth forecast for 2021 to 3.5% from 3.3% seen previously, and lowered its estimate for 2022 to 2.8% from 3.0%.