Nordea Bank (NDA-SE) Status Update summary

Global outlook

• Global GDP growth forecast cut to 3.3% in 2022 from 4.1% in January; growth seen at 3.2% in 2023 as the Ukraine war, China lockdowns and inflation weigh.

• High inflation expected through 2022, eroding purchasing power; risks to the outlook are large and tilted to the downside, including a possible EU ban on Russian energy imports.

• GDP forecasts: US 3.2% in 2022 and 2.1% in 2023; euro area 3.0% and 1.5%; China 4.0% and 5.0%.

• Oil prices expected to move sideways near $100 per barrel over the forecast horizon, with supply constraints and China lockdowns among the risks.

Monetary policy and markets

• Fed expected to raise rates rapidly, with several 50bp moves and the policy rate reaching 3.5% by mid-2023; ECB first hike expected in July.

• EUR/USD forecast at 1.00 by end-2022 and 1.10 by end-2023; German 10-year yields forecast at 2.0% by end-2023.

• Negative interest rates expected to end as central banks tighten; Nordic rate forecasts for end-2023: Denmark 1.15%, Sweden 1.25%, Norway 2.50%.

Nordic outlook

• Strong pre-war activity provides a buffer, but higher inflation and interest rates are set to slow growth; Sweden and Denmark face housing-market pressure.

• Sweden GDP growth forecast at 3.0% in 2022 and 1.0% in 2023; average home prices forecast to fall 7.0% in 2023.

• Denmark GDP growth forecast at 3.5% in 2022 and 1.0% in 2023; inflation forecast at 5.0% in 2022, with households’ confidence weakened by prices and rates.

• Norway mainland GDP growth forecast at 3.5% in 2022 and 2.0% in 2023; policy rate forecast at 2.5% at end-2023 as wage and price pressures persist.

• Finland GDP growth forecast at 2.0% in 2022 and 1.5% in 2023; export prices keep pace with import prices, while inflation is forecast at 4.7% in 2022.