Helge J. Pedersen, Nordea Group Chief Economist, gave an outlook on growth, inflation, financial markets, world trade etc. considering the new geopolitical situation.

His key points were:

– Growth momentum is changing as the US economy dampens and Europe gains speed,
– The Nordics have been on a divergent growth path but Sweden and Finland will soon start to catch up.
– Danish economy done extremely well – the new name is “Novo-nomics” – and Norway done well because of energy sector.
– Inflation is on the way down but there is still a risk of second-round effect from high wage increase.
– The central bank lower interest rates, and financial markets are too aggressive in their expectations.
– Public finances are in really dire straits and under pressure due to money must be spent on defence, interest on the debt, the aging population and the green and digital transition.
– The US presidential election can have a major impact on trade, foreign relations, security, climate and monetary policy.
– Volatility will remain high both in financial markets and real economy.

Helge J. Pedersen had a lot of to the point remarks, here are a few:

“Economic fragmentation is the new name of the game. Many companies have a “China plus one”-strategy, and for the first time the US is importing more from Mexico than China – but China has never exported more to Mexico than last year. Trade will find a way. “

“The only sector which is actually holding Europe up now, is the service sector. The manufacturing sector is in recession and has been that for almost two years with no relief in sight. We have to count on the service sector. That’s how it is in the whole world: Service sector is driving the economies.”

“Expect some modest growth in the world economy, expect central banks to continue cutting rates, don’t expect long-term fund yields to fall much from the present level, and the country maybe expect some higher long-term fund yields.”

Link to on-demand streaming of the session