For the first time since World War II all the major economies in the
world have slid into recession at largely the same time. Though it
has been discussed whether the current recession could evolve into a
depression, Nordea's economists  emphasise in their new Economic
Outlook that this is not their baseline scenario.

- Actually, we see light at the end of the tunnel and expect a
gradual recovery of the world economy in the second half of 2009. The
main reason why we expect a reversal as early as this year is the
fast political response in most countries to counter the effects of
the crisis - eg, in the USA where the new president Barack Obama is
inaugurated today, says Global Chief Economist Helge J. Pedersen.

- However, it should be noted that unemployment will continue to rise
well into 2010 and that a turnaround in the beleaguered housing and
property markets is not imminent. Also, the currently much tighter
credit standards will dampen the strength of the upswing, says Helge
J. Pedersen.

Nordea's economists expect Denmark to experience the steepest drop in
economic activity since the oil crisis in the 1970s. In 2010 growth
will gradually resume, but unemployment will continue to rise and
likely reach almost 5 per cent over the next two years. On the other
hand, inflation is projected to be considerably lower in the years
ahead and the current account surplus will be somewhat higher. Public
finances now look set to slide into deficit, but there will still be
room for economic policy easing if the economic slowdown in  Denmark
turns out to be unexpectedly severe.

The steep downturn in the export markets will send the Finnish
economy into recession. After several years of substantial growth,
the economy will hardly grow at all over the next couple of years on
average. Unemployment will increase quite markedly, even though the
labour force will shrink exceptionally as a large number of people
will retire. The actual contraction phase will probably be over in
the summer, but the labour market will not rebound during the
forecast period.

The Norwegian economy is facing lean years following a tremendous
boom. Exports will be squeezed due to the international recession and
at the same time Norges Bank's survey of banks' credit standards
indicates that a relatively sharp tightening is underway. Pessimism
among consumers and businesses has also grown noticeably. Sharp rate
cuts, Norwegian krone weakness and a more expansionary fiscal policy
will to some extent alleviate the adverse effects, but will not
entirely offset these.
Uncertainties are rife for the Swedish economy. There is a risk that
weak demand at home and abroad, tighter credit standards and
declining employment will trigger a vicious spiral that will
dramatically slow down Swedish economic activity. However, there are
factors that will mitigate the downturn and eventually help break the
negative trend. An expansionary fiscal and monetary policy, rapidly
declining inflation and a weak Swedish krona will support the economy
and create the foundation for a gradual recovery over time.
Particularly the Riksbank's aggressive rate cuts have lowered
mortgage rates and thus eased the interest burden for households.

View interview with Helge Pedersen on Nordic economic trends at
www.nordea.com/eo/uk - where the report can be downloaded.

For further information:
Helge J. Pedersen, Global Chief Economist, +45 33 33 31 26


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