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Norwegian economy to start 2021 on the back foot This morning’s release of Q3 GDP data from Norway confirmed that the mainland economy bounced back strongly over the summer. However, new restrictions both locally and in key trade partners mean that the …
17th November 2020
It’s always darkest before the dawn The prospect of a vaccine offers hope of faster growth next year than we have factored into our current forecasts. That said, there is less scope for a “vaccine bounce” in Switzerland and the Nordic economies in 2021 …
13th November 2020
The vaccine offers hope of faster growth next year than we have factored into our current forecasts. However, the recent surge in virus cases in Switzerland (see Chart 1.), the rising strain on the healthcare sector in Sweden, and steps taken to contain …
12th November 2020
Weak core inflation set to persist The October inflation data from Sweden do not move the needle for policymakers. However, the persistent weakness of underlying price pressures is likely to remain a headache for the Riksbank over the coming years. CPIF …
The news that mutated versions of SARS-CoV-2 have been transmitted from minks to humans in Denmark has raised fears that the goalposts for a vaccine may have already shifted. This Update answers six key questions about the new strain of the virus and its …
11th November 2020
Norwegian inflation set to fall back next year While Norwegian inflation edged further above target in October, it is set to fall back sharply in H1 2021 and so the Norges Bank will be in no rush to raise interest rates. The small increase in the …
10th November 2020
Recoveries are on borrowed time In case you missed it, we cut our near-term GDP forecasts this week following the imposition of new national lockdowns in parts of Europe. (See here .) The virus was spreading rapidly in Switzerland when we published our …
6th November 2020
As expected, the Norges Bank did not set off any fireworks this morning, and the decision to leave its key interest rate on hold at zero was never in doubt. The economy is likely to prove comparatively resilient during the second wave, but we still expect …
5th November 2020
Rebound set to shift into reverse in Q4 The 4.3% q/q increase in Swedish GDP in Q3 was below both our and the consensus forecast, but leaves the economy on track for a comparatively shallow drop in output this year – broadly in line with the record …
While Switzerland has not yet followed France and Germany in announcing a new national lockdown, we now expect GDP to contract in Q4, broadly in line with the euro-zone. Meanwhile, although the Nordics economies will remain comparatively resilient, we …
4th November 2020
Absence of price pressures limits the SNB’s options The absence of price pressures in Switzerland will remain a headache for the SNB over the coming years. And with the ECB set to loosen policy again next month, Swiss policymakers’ focus will remain …
3rd November 2020
We think that the Swedish krona will appreciate a little further against the euro and the dollar in 2021, but doubt that it will remain one of the best-performing G10 currencies, as it has been this year. The Swedish krona has been the …
2nd November 2020
Ongoing industrial rebounds to provide limited cheer The positive set of manufacturing PMIs for October suggest that the industrial rebound gathered momentum at the beginning of Q4. However, this is of little comfort given the imposition of new lockdowns …
Time running out on Swiss recovery Data published on Friday showed a smaller-than-expected fall in the Swiss KOF Economic Barometer in October, from a downwardly-revised 110.1 in September to 106.6. This left it above its February level and suggests that …
30th October 2020
The Norges Bank will almost certainly leave its key interest rate on hold at zero next Thursday and will probably reiterate that it is in no rush to hike. However, given the backdrop of rising house prices, we think that policymakers will start to …
29th October 2020
Outperforming at the start of Q4 The rise in Sweden’s Economic Tendency Indicator (ETI) in October came as a bit of a surprise given the recent surge in COVID-19 cases there and suggests that the economic recovery – which monthly GDP data suggest had …
28th October 2020
Nordics not immune, but comparatively resilient In case you missed it, we released our latest Nordic & Swiss Economics Outlook this week. Of course, virus developments are the key uncertainty. However, assuming that the Nordics continue to avoid the scale …
23rd October 2020
We think that Swiss policymakers would be prepared to match any small interest rate cut by the ECB, albeit reluctantly. However, if policymakers in the euro-zone opt to ease policy in other ways, as we think is more likely, this may help to reduce …
22nd October 2020
Having outperformed in H1, the Nordic economies are set for some of the smallest falls in output in Europe this year. Of course, the virus is the key uncertainty for the outlook, but it is encouraging that Denmark’s second wave already looks to have …
20th October 2020
Switzerland in the grip of a second wave The share of virus tests returning positive results in Switzerland doubled in the first two weeks of October and mirrored similar rises seen in Italy and the UK over the same period. At about 7%, the positivity …
16th October 2020
The slowdown in the pace of monthly GDP growth in Norway in August was driven in large part by a fall in consumer spending. The post-lockdown spending splurge on goods appears to have peaked before spending on services was strong enough to pick up the …
13th October 2020
Frustratingly low prices pressures point to further support down the line The larger-than-expected fall in Swedish inflation in September will only strengthen the hand of the dovish contingent of the Riksbank’s Executive Board. We think it is only a …
Who’s afraid of the Big, Bad US Treasury? Thomas Jordan banged a familiar drum in a speech this week, yet again justifying the SNB’s FX interventions that have seen its balance sheet balloon over the past decade. He also stressed that the Bank’s must have …
9th October 2020
The further slowdowns in monthly GDP growth in Norway and Sweden in August support our view that it will take a long time for output to recover to pre-crisis trend levels anywhere in Europe. The 0.6% m/m increase in mainland Norwegian GDP in August was …
8th October 2020
Although the SNB meets the US Treasury’s criteria for a “currency manipulator”, we doubt this would deter it from intervening further in the foreign exchange market if required to keep the franc stable. New data detailing the SNB’s FX transactions confirm …
7th October 2020
Brighter outlook for the NOK next year Having fallen to four-month lows against the euro in late-September, the Norwegian krone and Swedish krona bounced back this week. While the NOK is vulnerable to falling further in the near term, we think that a …
2nd October 2020
Rising order backlogs to sustain industrial rebounds While Swiss inflation has risen since reaching a trough in June, it is likely to stay very weak in the near term. Meanwhile, the positive set of September manufacturing PMIs from Switzerland and Sweden …
1st October 2020
Switzerland comparatively well placed The increase in the KOF Economic Barometer in September, to a fresh decade high, suggests that the Swiss economy gathered momentum going into Q4. While the second waves of virus cases in parts of Europe are a downside …
30th September 2020
Although the Norwegian krone has been the worst performing G10 currency so far in 2020 (see Chart 1), we expect it to make up some lost ground in 2021 even if it falls a bit more in the near term. The US dollar rose sharply against most other G10 …
29th September 2020
The Swiss head to the polls After a virus-imposed hiatus, the Swiss are set to resume doing what they love best this Sunday: voting. Five separate referenda will be held, covering a range of topics including whether the government should buy some new …
25th September 2020
The fact that policymakers at the SNB and the Norges Bank left policy settings unchanged this morning came as no surprise. Both banks are likely to leave policy unchanged throughout our forecast horizon and, in the case of the SNB, probably until at least …
24th September 2020
Sweden has so far avoided a second wave of virus cases and the prospect of it sticking to its light-touch approach, rather than tightening restrictions in line with much of Europe, means that the risk of a renewed drop-off in economic activity in Q4 is …
22nd September 2020
The Riksbank’s decision to leave the repo rate on hold at zero this morning was never in doubt, but it left the option of a rate cut firmly on the table, linking it explicitly to moves in inflation expectations. We think it more likely than not that the …
“No change” three ways on the policy menu Central bankers will take centre stage next week, with the Riksbank kicking things off on Tuesday, and the SNB and the Norges Bank both set to make scheduled policy announcements within 30 minutes of each other on …
18th September 2020
We expect the Swiss National Bank and the Norges Bank to both leave their policy settings unchanged next Thursday (24 th September). But while the former will no doubt sound as dovish as ever, Norwegian policymakers will probably further prepare the …
17th September 2020
After a tweak-laden last policy meeting, the Riksbank is likely to maintain the status quo next Tuesday (22 nd September). While there is no burning platform for policy change, we think that the next move in interest rates will eventually be down. Recall …
15th September 2020
Given Norway’s decision to re-open its economy comparatively early, its post-lockdown experience has been watched closely for clues as to how other economies could expect to fare. The latest monthly data showed that mainland GDP continued to expand in …
11th September 2020
Sweden’s virus approach may be bearing fruit Interpreting Covid data is of course part science, part art, but the fact that confirmed virus cases per capita in Sweden fell below those in its Nordic peers in early-September appears to vindicate Sweden’s …
Norwegian inflation pressures set to ease before long Signs of rising domestic price pressures in Norway raise the chance of a hawkish shift by the Norges Bank at the next meeting. However, with imported price inflation set to peak soon, and services …
10th September 2020
Recovery shifts down a gear Data released this morning show that the rebound in economic activity in Norway lost a bit of steam in July, which is in keeping with signs elsewhere in Europe. Nonetheless, given that the plunge in output in Norway was much …
8th September 2020
Riksbank still biding its time Policymakers at the Riksbank won’t admit it, but they will be feeling pretty comfortable with their position, all things considered. After all, the further increase in the services PMI in August suggests that activity in the …
4th September 2020
Ongoing period of deflation limits the SNB’s options The current bout of deflation in Switzerland is likely to persist well into next year, and will continue to be a headache for the SNB, particularly given the recent rise in the franc against the US …
3rd September 2020
Signs of rising manufacturing backlogs bode well for the near term The positive set of August manufacturing PMIs from Switzerland and the Nordics suggests that the recovery in industrial activity continued over the summer. While the fortunes of industry …
1st September 2020
Nordics top of the league in H1… The Nordic economies emerged at the top of the economic league in Europe in H1, with comparatively small declines in output. (See here .) The second reading of Swedish Q2 GDP, released this morning, shows that the …
28th August 2020
Recovery losing pace The rise in Sweden’s Economic Tendency Indicator (ETI) in August was smaller than in the previous two months and suggests that although the recovery there continued in Q3, it may already be slowing. Meanwhile, the sharp rise in retail …
27th August 2020
Swiss economy on track for a comparatively modest drop in GDP this year Data released this morning show that the Swiss economy weathered the crisis comparatively well in the first half of the year. While its fortunes are closely tied to those in the …
While Sweden’s economy got off relatively lightly in H1 thanks to the light-touch lockdown, Norway and Finland saw even smaller falls in activity at a lower human cost. Nonetheless, the success of the Nordics does not offer any obvious lessons for those …
26th August 2020
Norway outperformed light-touch Sweden in H1, despite locking down While Sweden’s light-touch response to Covid has hogged the headlines, data released this morning show that the Norwegian economy outperformed its Nordic cousin in the first half of the …
25th August 2020
“Two-speed” Swiss industry finds reverse gear The belated release of Q2 industrial production data from Switzerland on Thursday laid bare the stark divergence in fortunes within the sector. Total manufacturing output dropped by 8.3% q/q in Q2, which was …
21st August 2020
This morning’s decision by the Norges Bank to leave its key interest rates on hold at zero was never really in doubt. We still think it more likely than not that the Bank will leave rates on hold throughout our forecast horizon. Today’s announcement was …
20th August 2020
