2023 will be shaped by efforts to bring down inflation, and if all goes well, a mild recession should be enough to rebalance the economy.
However, it is a difficult task for central banks to achieve, and there is a risk of a deep recession or inflation to become more ingrained, writes
2022 was the year of inflation.
2023 will to a large extend be influenced by central bank efforts to bring inflation down.
But as last year's experience has clearly shown, inflation can be very difficult to predict and also in the coming time, it will be necessary to continually monitor economic data very closely to see where we are heading, says chief economist at
If all goes well, a mild recession should be enough to rebalance the economy.
Las Olsen
Chief Economist,
'As we see it, we are approaching or already in a recession in both the Nordic countries and the wider euro area, as real incomes are being eroded by higher prices, and higher interest rates are dampening demand. If all goes well, a mild recession should be enough to rebalance the economy and we can move on afterwards with somewhat higher unemployment but economies that have not been seriously damaged,' says Las Olsen.
But there is risks looming in the horizon:
'It is a very difficult task for central banks to achieve just the right amount of tightening, and there is a large risk that the recession will be either unnecessarily deep or that inflation will be drawn out and become more ingrained,' says Las Olsen.
Darkening outlook from a bright starting point.
A bad situation for households to be felt throughout the economy.
2022 went better than expected, but the outlook has worsened.
Price increases have worsened the outlook.
Strong Nordic starting point
Heading into a recession, the Nordic countries have a strong starting point. Compared to most other European countries, the Nordic countries have been less damaged during the Covid crisis, and have recovered more quickly. Government finances are generally in good shape, and measures to help households and businesses cope with inflation are comparatively modest.
'Exploding natural gas prices have not been a big negative terms of trade chock for the Nordics, as it has for much of
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