Økonomisk Oversikt, september 2012 (NO)
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The Economic Outlook is an internationally respected report on the state of the global economies with an extra focus on the Nordic markets, as well as the Baltic, Polish, Russian and key emerging ...

The Economic Outlook is an internationally respected report on the state of the global economies with an extra focus on the Nordic markets, as well as the Baltic, Polish, Russian and key emerging markets plus the global oil and commodity markets. It is published twice a year by the renowned team of analysts and economists at Nordea Markets and supplemented with an additional two global and Nordic updates. It is published in English as well as the four Nordic languages.

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Økonomisk Oversikt, september 2012 (NO) Document Transcript

  • 1. ■ Innhold ØKONOMISK OVERSIKT SEPTEMBER 2012 Sakte fart, men ikke for Norge ■ Skjør oppgang ■ Veksten internasjonalt fortsetter, men i lav fart og på en gjørmet vei. Euroområdet er igjen på vei ned i resesjon, mens farten i amerikansk og internasjonal økonomi ellers har avtatt. Det er tegn til noe bedre tider fremover, men usikkerheten er fortsatt stor. Tygge havner rammes også ■ Investorer har sett på Danmark, Finland, Norge og Sverige som trygge havner. Mens solen fortsetter å skinne på norsk økonomi, trues den svenske av mørke skyer. Danmark og Finland er på kanten av ny resesjon. OVERBLIKK 04 SAKTE FART, MEN IKKE FOR NORGE NORGE 08 RISIKO FOR OVEROPPHETING USA 18 SAKTE FART FREMOVER EUROOMRÅDET 20 INGEN OPPGANG FØR TILLITEN ER TILBAKE RUSSLAND 26 DÉJÀ VU FOR INFLASJON KINA 31 STABILITET, STABILITET OG….STABILITET OLJE OG RÅVERER 35 OLJEPRISEN VIL HOLDE SEG HØY SPESIALTEMA 37 TO ALTERNATIVE SCENARIER FOR INTERNASJONAL ØKONOMI2 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 2. ■ InnholdOversiktstabeller Overblikk Sakte fart, men ikke for Norge ....................................................................... 4Makro nøkkeltall ................... 6 NORGERenter ...................................... 7 Risiko for overoppheting kan bli den største utfordringen .............................. 8 Derfor faller ikke eksporten .......................................................................... 10Valutakurser .......................... 7 Nordic economiesRedaktør SWEDEN Households prop up the economy ................................................................ 12Steinar JuelSjeføkonom DENMARKsteinar.juel@nordea.com Languishing economic growth ..................................................................... 14Tel +47 2248 6130 FINLAND Finnish economy has cooled down across the board .................................... 16Redaksjonen avsluttet Major economies30 August 2012 USA Moving slowly forward ................................................................................. 18 EURO AREA Restore confidence to end the recession ...................................................... 20Besøk oss på: UKwww.nordeamarkets.com UK growth stalling – awaiting outside help ................................................... 22 JAPAN The challenges remain in the long term ........................................................ 23Datakilder:Data er hentet fra Reuters Ecowin Emerging Marketsog nasjonale statistikkbyråer ogegne beregninger dersom ikke POLANDannet er angitt. Slowdown under control .............................................................................. 24 RUSSIA Inflation déjà vu ........................................................................................... 26 ESTONIA Economy remains in a soft patch ................................................................. 28 LATVIA Economy keeps delivering positive surprises ............................................... 29 LITHUANIA Showing resilience ...................................................................................... 30 CHINA Stability, stability and … stability.................................................................. 31 INDIA A drought of growth..................................................................................... 33 BRAZIL Slow BRIC healing ....................................................................................... 34 Commodities OIL Oil prices stay high but spare capacity buffer should build ........................... 35 METALS Metal prices scratching the bottom for now .................................................. 36 SPECIAL THEME Alternative scenario 1: Back on track ........................................................... 37 Alternative scenario 2: That sinking feeling .................................................. 383 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 3. ■ OverblikkSakte fart, men ikke for NorgeTillit er raskt å rive ned, men tar lang tid å bygge opp. omgang gir Norges Bank et noe større rom for å kunneOmfattende budsjettinnstramninger og økonomiske heve styringsrenten. I følge våre anslag vil Norges Bankreformer vedtas og gjennomføres i Irland, Portugal, være den første sentralbanken i et vestlig land som heverSpania og Italia. Det tar imidlertid tid før virkningene renten. Første renteøkning tror vi kommer i mars,blir så synlige at finansmarkedsaktørenes tillit til deretter en i andre del av 2013. I 2014 venter vi treperiferilandene vender tilbake. Tillit er avgjørende for at renteøkninger, hver på ¼ prosentpoeng.en selvgående vekst skal vende tilbake. Den europeiskesentralbankens (ECBs) annonserte villighet til å kjøpe Robust norsk eksport og industristatsobligasjoner utstedt av periferilandene kan bidra til Den kostnadsmessige konkurranseevnen til norsk industriat private investorers tillit kommer raskere. Det skal har forverret seg sterkt i år. Høy lønnsvekst, sterk kronelikevel mye til for at Eurosonen vil oppleve noe annet enn og svak produktivitetsvekst har bidratt til det. Likevel ersvak økonomisk vekst de neste par årene. Heller ikke i norsk industri en av de få i den vestlige verden som viserUSA tror vi veksten blir annet enn moderat, og vi tror vekst. Det har sammenheng med at norsk industri er blittheller ikke veksten i Kina vil vende tilbake til gamle mer og mer rettet inn mot å produsere utstyr til olje- oghøyder. Med en vekst i fastlands-BNP på nær 4 prosent gassvirksomhet i både Norge og utlandet.fremstår Norge som et høyvekstland. Sammensetningen av norsk eksport utenom olje og gassHøyere vekst i Norge har endret seg vesentlig de siste 20-40 årene. For det 2009 2010 2011 2012E 2013E 2014E første har eksporten av tjenester utenom sjøfart øktVerden (PPP) -0,7 4,7 3,8 3,1 3,5 3,8 - USA -3,5 2,4 1,8 2,2 2,0 2,2 kraftig. Veksten i slike tjenester har motvirket en kraftig - Euro området -4,2 1,9 1,5 -0,4 0,6 1,7 nedgang i betydning til fraktinntekter fra utenriks sjøfart. - Japan -5,5 4,6 -0,7 2,5 1,6 1,1 Tjenesteeksporten samlet er derfor fortsatt nesten like- Norden -4,9 3,6 2,7 1,6 2,0 2,5 stor som tradisjonell vareeksport. Statistikken for - Danmark -5,8 1,3 1,1 0,7 1,9 2,1 - Finland -8,4 3,3 2,7 0,8 1,2 2,8 tjenesteeksporten er lite spesifisert, men det ser ut til at - Norge, fastland -1,6 1,9 2,4 3,7 3,0 2,8 det er eksport av tjenester knyttet til olje- og - Sverige -5,0 6,2 3,9 1,2 1,8 2,3 gassvirksomhet i utlandet, og til utstyr levert til slike- Fremvoksende økonomier 4,6 8,0 7,6 6,1 6,7 6,7 - Kina 9,2 9,2 10,5 8,0 8,3 8,5 formål, som særlig har vokst. Når det gjelder sammensetningen av vareeksporten er metalleksporten påVeksten i oljeinvesteringene på 20 prosent i år er en vikende front, mens eksporten av fisk (oppdrettslaks) ogviktig vekstdriver i norsk økonomi. Disse investeringene, av maskiner og utstyr har økt i viktighet. Maskiner ogsammen med fortsatt god ekspansjon i offentlig utstyr er en svært sammensatt eksportgruppe. Men det ertjenesteyting, gjør at Norge fremstår som spesiell. Det spesialiserte produkter, trolig mye relatert tilbidrar til ringvirkninger som høy lønnsvekst, høy vekst i offshorevirksomhet og energiproduksjon ellers som harprivat forbruk, høy vekst i boligprisene, god vekst i vokst. I kapittelet om Norge presenteres en nærmereinvesteringene i fastlands-Norge og høy analyse av tradisjonell norsk eksport.sysselsettingsvekst. Veksten i norsk økonomi ser ut til åbli enda sterkere enn det vi anslo i Økonomisk Oversikt Norsk industri og eksport har alltid hatt et relativt liteNorden som ble publisert 1. juni. Våre prognoser for innslag av masseproduserte forbruks- oginvesteringene i fastlands-Norge er noe oppjustert, det investeringsvarer hvor lønnskostnader er en viktigsamme er prognosene for tradisjonell eksport, og konkurranseparameter. Innslaget av slike produkter er deoljeeksporten. siste årene blitt enda mindre. Markedene for mange av produktene og tjenestene som er viktige for norsk eksportDet er krevende for de økonomiskpolitiske myndighetene har holdt seg godt oppe, og til dels vokst, trossi et lite land som Norge når veksten her er sterk mens den finanskrisen. Norge har også lite direkte eksport tiler lav i verden rundt oss. Det utgjør en risiko for den kriselandene i Eurosonen. Dette forklarer hvorfor norskfinansielle stabiliteten når lav rente i andre land bidrar til eksport og industri i så begrenset grad ble rammet avnær rekordlav styringsrente i høyvekstlandet Norge. konjunktursvikten knyttet til finanskrisen i USA og nå iKronen er sterk fordi den er attraktiv for Eurosonen.trygghetssøkende investorer og gir noe høyere Noe høyere rente og sterkere krone ville ikke værtavkastning enn andre trygge valutaer. Uroen i noen ulykkefinansmarkedene har avtatt i løpet av august og det er Når en ser hvordan strukturen på norsk eksport har endretgrunn til å vente at stabiliseringen vil fortsette når Deneuropeiske sentralbankens opplegg for obligasjonskjøp seg og hvor robust den har vært, er det grunn å reise spørsmål ved om bekymringen for den kostnadsmessigeblir kjent. Redusert uro i finansmarkedene og større konkurranseevnen til norsk næringsliv er overdrevet. Enrisikovillighet hos private investorer tilsier at interessenfor den norske kronen vil reduseres, noe som i neste får litt inntrykk av at man er opptatt av å bevare en4 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 4. ■ Overblikknæringsstruktur vi ikke lenger har, eller kanskje aldri har svak vekstoppgang i Eurosonen gjennom 2013 og 2014hatt. Tilsvarende som Sveits, har Norge eksportnæringer forutsetter at rentedifferansene fortsetter å komme mersom synes langt mindre følsomme overfor inn.kostnadsnivået enn tilfellet ville vært dersom eksportenvår hadde bestått av skjorter og TV’er. Ja, vi er blitt mer Vi har i et eget kapittel angitt to alternative scenarier forspesialiserte og sårbare overfor sjokk som eventuelt internasjonal økonomi, ett med høyere vekst og ett medmåtte ramme olje- og gassmarkedene. Men i en verden dypere og mer langvarig nedgang. Scenariet med høyeremed sterkere spesialisering vil en liten åpen økonomi vekst er blant annet basert på at tilliten til Eurosonensom den norske aldri kunne utvikle en bred og allsidig vender raskere tilbake enn det vi har forutsatt. Inæringsstruktur som det en stor økonomi som for nedgangsscenariet antas ECBs opplegg for kjøp aveksempel den amerikanske kan. Uansett hvilken obligasjoner å bli for restriktivt til å roe ned markedenespesialisering som utvikles i Norge vil vi som en liten og at motstanden i de nordlige Euroland mot bistand tilåpen økonomi være sårbare dersom noe skulle skje med periferilandene øker. Videre antas det at veksten i Kinamarkedet for det vi er mest spesialister på. svekkes ytterligere. I en slik situasjon vil resesjonen iOppbyggingen av petroleumsfondet med et bredt Eurosonen forsterkes og fortsette gjennom 2013.investeringsunivers er en måte å redusere denne Resultatet antas også å bli at oljeprisen faller til USD 75-sårbarheten på, og å lette omstillingene når 80 pr. fat på det laveste. Selv et slikt scenario vil ioljevirksomheten en gang går mot slutten. Med de nye begrenset grad dempe veksten innen offshorenæringene ifunnene som nå gjøres på norsk sokkel er tidspunktet for Norge. I utgangspunktet venter vi at oljeprisen vil stigedet skutt ut i tid. svakt fremover, til USD 116 pr. fat i slutten av 2014.Selv om Norge har god tilgang på arbeidskraft fra Langsom oppgang i USAutlandet, er det ikke til å unngå at den sterke Oppgangen i USA har vært langsom. Kvartaler medekspansjonen innen offshorevirksomheten krever at robust vekst har vært avløst av kvartaler med lav vekst.andre bedrifter frigjør arbeidskraft ved å legge ned Etter relativt høy vekst i vinter, har vi nå bak oss et svaktproduksjon eller flytte til utlandet. Sterkere krone kvartal. Vi venter at veksten i USA tar seg noe opp igjenog/eller høy lønnsvekst er mekanismene som får det til. i høst og i 2013, men oppgangen etter finanskrisen vilDet ville trolig ikke vært noen stor ulykke om renten i fortsette å fremstå som moderat. Det skaper storNorge var satt noe høyere og kronen var blitt noe usikkerhet at det vil bli store skatteøkninger og kutt isterkere. Lønnsveksten kunne da blitt noe lavere, og utgiftene på det føderale budsjettet dersomrisikoen for finansiell ustabilitet redusert. republikanerne og demokratene i Kongressen ikke blir enige om noe annet. I våre prognoser har vi forutsatt atViktige uker for Eurosonen disse tilstramningene i budsjettet blir reversert. Hvis ikkeSeptember blir avgjørende for antagelsen om at vil USA kunne gå inn i en ny resesjon neste år.finansuroen i Euroområdet ikke vil eskalere igjen. Deneuropeiske sentralbankens (ECBs) opplegg for kjøp av Større usikkerhet om Kinastatsobligasjoner skal vedtas og offentliggjøres. Det er Den økonomiske veksten i Kina har avtatt, men vi venterparlamentsvalg i Nederland som kan resultere i en at den tar seg noe opp igjen i løpet av høsten.regjering som er enda mer negativ til finansiell bistand til Myndighetene har redusert renten og lettet påkriselandene. Videre skal den tyske forfatningsdomstolen kredittrestriksjonene. Ytterligere lettelser i penge- ogavgjøre om krisefondet ESM er i strid med den tyske kredittpolitikken kan ventes. Det foreligger ogsågrunnloven. Og endelig får vi statusrapporten om Hellas omfattende investeringsplaner på regionnivå. I løpet avfra troikaen IMFEU-KommisjonenECB. Den blir de kommende måneder vil det foretas store endringer iavgjørende for om Hellas får utbetalt mer penger og gis det politiske lederskapet i Kina, både sentralt og pånoe mer tid til å redusere budsjettunderskuddet og region- og lokalnivå. Regional BNP-vekst er vanligvisgjennomføre avtalte reformer. Skulle rapporten bli svært blitt vurdert som et suksesskriterium for regionale ognegativ går det mot en gresk finansiell krise og lokale partipamper. Derfor er det all grunn til å ventesannsynlig uttreden av Eurosonen i løpet av høsten. kraftige stimulansetiltak på disse nivåene i månedene som kommer. Mye av dette vil måtte finansieres med lån.Situasjonen i Hellas er vanskelig, men Gjeldssituasjonen til regionene er i utgangspunktetsamlingsregjeringen ledet av statsminister Samaras uoversiktlig, og det er grunn til bekymring for densignaliserer vilje til å følge opp kravene fra EU og IMF. finansielle stabiliteten når vi ser noe lenger frem.Videre er det god grunn til vente at ECBs opplegg forkjøp av statsobligasjoner kan bidra til å redusere Steinar Juel, sjeføkonomrentedifferansen mellom periferilandene og Tyskland. steinar.juel@nordea.com +47 2248 6130Alle problemer vil ikke med dette være løst, men det gjørjobben lettere for regjeringer som kjemper for å få nedbudsjettunderskuddene, og for banker som skal låne utpenger til investeringer i næringslivet. Våre anslag om en5 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 5. ■ OverblikkBNP reel vekst, % Inflasjon, % 2010 2011 2012E 2013E 2014E 2010 2011 2012E 2013E 2014EVerden1) 4.6 3.8 3.1 3.5 3.8 Verden1) 2.8 4.1 2.9 2.9 2.9USA 2.4 1.8 2.2 2.0 2.2 USA 1.6 3.1 2.1 2.2 2.2Euroområdet 1.9 1.5 -0.4 0.6 1.7 Euroområdet 1.6 2.7 2.2 1.6 1.6Kina 9.2 10.5 8.0 8.3 8.5 Kina 3.3 5.4 3.1 4.0 3.8Japan 4.6 -0.7 2.5 1.6 1.1 Japan -0.7 -0.3 0.2 -0.1 -0.1Danmark 1.3 0.8 0.7 1.9 2.1 Danmark 2.3 2.8 2.4 2.0 2.2Norge 1.9 2.4 3.7 3.0 2.8 Norge 2.5 1.2 0.8 1.8 2.1Sverige 6.2 3.9 1.2 1.8 2.3 Sverige 1.2 3.0 1.2 1.2 2.0UK 1.8 0.8 -0.4 1.0 1.7 UK 3.3 4.5 3.0 2.2 1.4Sveits 2.7 2.1 1.5 1.9 2.4 Sveits 0.7 0.2 -0.7 0.6 1.6Tyskland 4.0 3.1 0.9 1.4 2.1 Tyskland 0.2 1.2 1.9 1.7 2.1Frankrike 1.6 1.7 0.1 0.8 1.7 Frankrike 0.1 1.7 2.1 1.8 1.9Italia 1.8 0.5 -2.3 -0.5 1.0 Italia 1.6 2.9 3.1 2.1 1.5Spania -0.3 0.4 -1.2 -0.9 1.1 Spania 2.0 3.1 2.4 2.2 0.5Nederland 1.6 1.1 -0.2 1.2 1.7 Nederland 0.9 2.5 2.4 1.7 1.8Østerrike 2.3 2.7 0.9 0.8 1.7 Østerrike 1.7 3.6 2.2 1.8 1.9Belgien 2.4 1.8 -0.4 0.6 1.8 Belgien 2.3 3.5 2.2 1.5 1.7Portugal 1.4 -1.6 -2.7 0.0 1.2 Portugal 1.4 3.6 2.9 1.5 1.3Hellas -3.5 -6.9 -6.6 -0.9 1.2 Hellas 4.7 3.1 0.5 -0.5 0.0Finland 3.3 2.7 0.8 1.2 2.8 Finland 1.2 3.4 3.0 2.5 2.3Irland -0.8 1.4 -0.2 1.5 2.1 Irland -1.6 1.2 1.8 1.5 1.5Estland 2.3 7.6 2.3 3.5 3.8 Estland 3.0 5.0 3.7 3.0 2.9Polen 3.9 4.3 2.8 2.3 3.1 Polen 2.6 4.3 3.9 2.7 2.2Russland 4.0 4.4 4.2 4.8 5.0 Russland 6.9 8.5 6.3 6.8 7.0Latvia -0.3 5.5 4.2 2.5 3.9 Latvia -1.1 4.4 2.3 2.5 2.8Litauen 1.4 5.9 2.7 3.3 3.5 Litauen 1.3 4.1 3.0 2.8 3.0India 9.6 6.9 6.0 6.7 7.2 India 9.6 9.5 7.5 6.8 7.0Brasil 7.6 2.8 2.6 4.6 4.8 Brasil 5.0 6.4 5.2 5.4 5.8Offentlig budsjettbalanse, % av BNP Driftsbalanse, % av BNP 2010 2011 2012E 2013E 2014E 2010 2011 2012E 2013E 2014EUSA -8.9 -8.6 -7.0 -5.5 -4.1 USA -3.0 -3.1 -3.0 -3.5 -3.0Euroområdet -6.2 -4.1 -3.7 -3.0 -2.5 Euroområdet 0.0 0.0 0.3 0.7 1.0Kina -1.7 -1.1 -1.5 -2.3 -1.9 Kina 5.1 2.8 2.5 2.2 1.5Japan -9.0 -9.7 -9.9 -9.6 -9.0 Japan 3.6 2.0 2.1 2.5 2.4Danmark -2.7 -1.9 -3.9 -2.1 -0.5 Danmark 5.5 6.7 5.8 5.1 4.4Norge 11.3 13.8 13.7 13.9 13.6 Norge 12.4 14.5 14.9 15.4 15.1Sverige -0.1 0.1 -0.3 -1.0 -0.5 Sverige 6.8 7.0 7.2 7.6 7.5UK -10.4 -8.3 -7.6 -6.4 -4.7 UK -2.5 -1.9 -2.3 -2.1 -1.3Sveits 0.7 0.8 0.1 0.1 0.2 Sveits 14.3 10.4 9.3 8.7 9.9Tyskland -4.3 -1.0 -0.8 -0.6 -0.5 Tyskland 5.8 5.3 4.6 4.4 4.0Frankrike -7.1 -5.2 -4.7 -3.9 -3.5 Frankrike -2.2 -2.7 -2.4 -2.1 -2.0Italia -4.6 -3.9 -2.0 -1.8 -1.0 Italia -3.5 -3.1 -2.0 -1.0 -0.5Finland -2.5 -0.6 -0.5 -0.1 0.5 Finland 1.6 -1.1 -0.2 0.2 0.6Estland 0.2 1.0 -1.5 -0.5 -0.3 Estland 3.8 2.1 -2.3 -1.5 -1.3Polen -7.8 -5.1 -3.3 -3.3 -2.9 Polen -4.7 -4.3 -3.6 -3.0 -3.0Russland -4.0 0.5 0.2 0.5 0.7 Russland 4.8 4.5 4.2 3.0 2.5Latvia -8.2 -3.5 -2.2 -2.0 -2.0 Latvia 3.0 -1.2 -3.2 -3.5 -3.6Litauen -7.2 -5.5 -2.7 -3.0 -3.0 Litauen 1.1 -1.6 -2.7 -3.0 -3.0India -3.6 -6.6 -7.0 -7.5 -8.0 India -3.3 -2.8 -4.0 -3.0 -2.2Brasil -2.7 -2.4 -2.0 -2.1 -2.2 Brasil -2.3 -2.1 -2.5 -2.7 -2.81) Veid gjennomsnitt av landene i denne t abellen. Dekker 70,5%av verdens BNP. Vekt ene er beregnet ut fra kjøpekraf t skorrigert e BNP-nivåer for 2008 i henhold t il IM Fs World Economic Out look dat ab6 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 6. ■ OverblikkPengepolitiske styringsrenter Differanse styringsrenter mot Euro-området 30.8.12 3M 30.6.13 31.12.13 31.12.14 30.8.12 3M 30.6.13 31.12.13 31.12.14USA 0.25 0.25 0.25 0.25 2.00 USA -0.50 -0.25 -0.25 -0.25 1.00Japan 0.10 0.10 0.10 0.10 0.10 Japan1) -0.15 -0.15 -0.15 -0.15 -1.90Euroområdet 0.75 0.50 0.50 0.50 1.00 Euroområdet - - - - -Danmark 0.20 0.05 0.15 0.25 1.00 Danmark -0.55 -0.45 -0.35 -0.25 0.00Sverige 1.50 1.25 1.00 1.50 2.00 Sverige 0.75 0.75 0.50 1.00 1.00Norge 1.50 1.50 1.75 2.00 2.75 Norge 0.75 1.00 1.25 1.50 1.75UK 0.50 0.50 0.50 0.50 1.00 UK -0.25 0.00 0.00 0.00 0.00Sveits 0.00 0.00 0.00 0.50 1.00 Sveits -0.75 -0.50 -0.50 0.00 0.00Polen 4.75 4.50 4.00 4.00 4.50 Polen 4.00 4.00 3.50 3.50 3.50Russland 8.00 8.00 8.25 8.25 8.25 Russland 7.25 7.50 7.75 7.75 7.25Kina 6.00 5.75 5.75 6.00 6.00 Kina 5.25 5.25 5.25 5.50 5.00India 8.00 8.00 7.75 7.75 7.50 India 7.25 7.50 7.25 7.25 6.50Brasil 7.50 7.50 7.50 8.00 10.50 Brasil 6.75 7.00 7.00 7.50 9.50 1) M ot USA3 mdr. renter Differanse 3 mnd. renter mot Euro-området 30.8.12 3M 30.6.13 31.12.13 31.12.14 30.8.12 3M 30.6.13 31.12.13 31.12.14USA 0.42 0.45 0.50 0.60 2.50 USA 0.13 0.20 0.25 0.10 1.30Euroområdet 0.29 0.25 0.25 0.50 1.20 Euroområdet - - - - -Danmark 0.31 0.35 0.40 0.70 1.45 Danmark 0.03 0.10 0.15 0.20 0.25Sverige 1.95 1.55 1.50 2.00 2.50 Sverige 1.66 1.30 1.25 1.50 1.30Norge 2.05 2.02 2.27 2.43 3.16 Norge 1.76 1.77 2.02 1.93 1.96UK 0.68 0.60 0.60 0.60 1.25 UK 0.40 0.35 0.35 0.10 0.05Polen 5.04 4.85 4.35 4.30 4.80 Polen 4.75 4.60 4.10 3.80 3.60Russland 7.17 7.40 7.50 7.50 8.00 Russland 6.88 7.15 7.25 7.00 6.80Latvia 0.61 0.55 0.50 0.50 1.20 Latvia 0.32 0.30 0.25 0.00 0.00Litauen 0.89 0.75 0.80 1.10 1.70 Litauen 0.60 0.50 0.55 0.60 0.5010-års benchmark statsobligasjonsrenter Differanse 10-års renter mot Euro-området 30.8.12 3M 30.6.13 31.12.13 31.12.14 30.8.12 3M 30.6.13 31.12.13 31.12.14USA 1.64 2.00 2.50 3.00 4.00 USA 0.30 0.25 0.60 0.80 1.35Euroområdet 1.35 1.75 1.90 2.20 2.65 Euroområdet - - - - -Danmark 1.08 1.55 1.75 2.05 2.55 Danmark -0.26 -0.20 -0.15 -0.15 -0.10Sverige 1.38 1.80 2.00 2.60 3.00 Sverige 0.04 0.05 0.10 0.40 0.35Norge 1.97 2.58 2.86 2.96 3.14 Norge 0.62 0.83 0.96 0.76 0.49UK 1.48 1.75 2.00 2.25 2.75 UK 0.14 0.00 0.10 0.05 0.10Polen 4.92 4.80 4.90 5.00 5.50 Polen 3.58 3.05 3.00 2.80 2.85Valutakurser mot NOK Valutakurser mot EUR og USD 30.8.12 3M 30.6.13 31.12.13 31.12.14 30.8.12 3M 30.6.13 31.12.13 31.12.14EUR/NOK 7.31 7.50 7.50 7.40 7.50 EUR/USD 1.26 1.30 1.20 1.15 1.10USD/NOK 5.81 5.77 6.25 6.43 6.82 EUR/JPY 1) 99 104 98 98 99JPY/NOK1 7.40 7.21 7.62 7.57 7.58 EUR/GBP 0.79 0.81 0.78 0.77 0.75DKK/NOK 0.98 1.01 1.01 0.99 1.01 EUR/CHF 1.20 1.20 1.20 1.25 1.30SEK/NOK 0.87 0.90 0.88 0.86 0.87 EUR/SEK 8.36 8.35 8.50 8.60 8.60GBP/NOK 9.21 9.29 9.68 9.67 10.0 EUR/NOK 7.31 7.50 7.50 7.40 7.50CHF/NOK 6.08 6.25 6.25 5.92 5.77 EUR/PLN 4.19 4.00 3.92 3.80 3.70PLN/NOK 1.74 1.88 1.91 1.95 2.03 USD/JPY 78.6 80.0 82.0 85.0 90.0 USD/GBP 1.58 1.61 1.55 1.50 1.47RUB/NOK 0.18 0.19 0.21 0.23 0.24 USD/CHF 0.96 0.92 1.00 1.09 1.18LVL/NOK 10.5 10.7 10.7 10.5 10.7 USD/SEK 6.66 6.42 7.08 7.48 7.82LTL/NOK 2.12 2.17 2.17 2.14 2.17 USD/NOK 5.81 5.77 6.25 6.43 6.82CNY/NOK 0.92 0.91 0.99 1.03 1.12 USD/PLN 3.33 3.08 3.27 3.30 3.361) Pr. 100 enheder USD/CNY 6.35 6.36 6.34 6.25 6.10 USD/INR 55.6 55.0 53.0 48.0 45.0 USD/BRL 2.05 1.95 1.85 1.75 1.707 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 7. ■ NorgeRisiko for overoppheting kan bli den største utfordringen Sterk vekst i innenlandsk etterspørsel eksporten fra fastlandsøkonomien holdt seg bedre oppe enn fryktet. Deler av eksportnæringene sliter, men Høy innvandring hindrer overoppheting veksten i samlet eksport har blant annet vært holdt oppe Og Norges Bank kan gå forsiktig fram av en sterk vekst i eksporten av elektrisitet. Det er trolig er midlertidig, men den sterke veksten i eksporten avDet er få svakhetstegn i norsk økonomi og vi ser ingen verkstedprodukter er neppe det. Den reflekterergrunn til å endre vårt optimistiske bilde av utviklingen oljeleverandørindustriens økende betydning for norskfremover. Veksten blir sterk, men takket være høy eksport. Med vedvarende høye oljepriser er utsiktene forarbeidsinnvandring unngår vi sannsynligvis en denne eksporten god også for de neste årene. I løpet avoveroppheting og kraftig tiltagende kostnadsvekst. prognoseperioden ventes også veksten i den merLønnsveksten blir riktignok langt høyere enn hos våre tradisjonelle eksportindustrien å ta seg opp som følge avnaboland, men ikke så høy at den presser prisveksten sterkere vekst i våre tradisjonelle eksportmarkeder.over inflasjonsmålet. Sterk økonomisk vekst og noehøyere kapasitetsutnyttelse tilsier likevel en viss økning i For leverandørindustrien til oljesektoren er den ekstremtrentene de neste par årene. Det er imidlertid begrenset kraftige veksten i norske oljeinvesteringer av avgjørendehva Norges Bank kan gjøre med norske renter uten at betyding. Veksttakten vil avta noe i årene som kommer,kronen styrkes for mye. men vi regner likevel med at kapasitetsbegrensninger på mange områder blir viktigste hinder for ekspansjonen iSterk forbruksvekst disse næringene. Trykket i denne delen av industrienSterk lønns- og sysselsettingsvekst og en svært lav synes å være en viktig grunn til at lønnsoppgjørene gir enprisvekst betyr at forbrukernes kjøpekraft for tiden øker lønnsvekst i industrien langt over det vi ser ikraftig. Det er derfor ikke underlig at forbruksveksten i konkurrentlandene.første halvår var svært høy etter en merkelig svakutvikling i fjor. Med et i utgangspunktet høyt nivå på Også fastlandsinvesteringene regner vi med vil vokse brasparingen og et fortsatt sterkt arbeidsmarked regner vi framover, selv om veksttakten neppe blir så høy som formed at forbruksveksten fortsetter med uforminsket styrke oljeinvesteringene. Investeringsviljen bør være god medut året og inn i 2013. I løpet av 2013 og i 2014 ventes sterk produksjonsvekst i store deler av næringslivet. Noeforbruksveksten å avta noe som følge av et noe høyere høyere kredittmarginer og strengere kredittpraksis irentenivå og mer moderat vekst i sysselsettingen. bankene kan begrense investeringsveksten noe, men det det oppveies trolig i stor grad av at det generelleBedre eksport, men svakere fastlandsinvesteringer rentenivået er svært lavt. En eventuell kraftig eskaleringTil tross for svak vekst hos våre handelspartnere, sterk av eurokrisen kan imidlertid gi en kraftigekrone og en lønnsvekst godt over andre lands har kredittinnstramning og er kanskje en av de største risikoene for norsk økonomi.Norge: Makroøkonomiske indikatorer (% årlig vekst hvis ikke annet oppgitt) 2009( bn) 2010 2011 2012E 2013E 2014EKonsum i husholdninger og ideelle org. 1,028 3.7 2.4 3.7 3.5 3.0Konsum i offentlig forvaltning 531 1.7 1.5 2.0 2.5 2.5Bruttoinvesteringer i fast kap. i alt 516 -5.2 6.4 7.2 4.9 3.7 - Bruttoinvesteringer, Fastlands-Norge 349 -2.5 8.0 3.2 3.7 3.7 - Bruttoinvesteringer, olje 144 -14.3 9.1 20.0 8.0 4.0Lagerinvesteringer* 14 1.9 0.3 0.0 0.0 0.0Eksport 929 1.8 -1.4 1.6 1.1 1.3 - olje og gass 416 -4.8 -6.2 2.5 0.0 0.0 - andre varer 277 2.5 -0.4 0.0 2.0 2.5Import 660 9.9 3.5 3.0 3.9 3.0BNP 2,357 0.7 1.4 3.4 2.4 2.3BNP, Fastlands-Norge 1,876 1.9 2.4 3.7 3.0 2.8Arbeidsledighet (AKU), % 3.6 3.3 3.0 2.9 2.9Konsumpriser, % årsvekst 2.5 1.2 0.8 1.8 2.1Underliggende inflasjon, % årsvekst 1.4 0.9 1.2 1.5 2.1Årslønn inkl. pensjonskostnader, % årsvekst 3.6 4.3 4.2 4.3 4.3Driftsbalanse (mrd. NOK) 313.6 393.9 437.1 482.9 497.5- i % av BNP 12.4 14.5 14.9 15.4 15.1Handelsbalanse i % av BNP 12.4 13.8 14.6 15.1 14.8Overskudd offentlige budsjetter 284.5 375.1 400.0 435.0 450.0- i % av BNP 11.3 13.8 13.7 13.9 13.6* Contribution to GDP growth (% points)8 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 8. ■ Norge Norsk industriproduksjon øker forsiktigeInflasjonen kryper sakte oppoverSterk vekst i innenlandsk etterspørsel vil bidra til sterkproduksjonsvekst i årene som kommer. Takket være høyinnvandring regner vi ikke med at det blir noe problem ådekke etterspørselen etter arbeidskraft. Vi regner hellerikke med store flaskehalsproblemer på arbeidsmarkedetselv om det er knapphetsproblemer innen enkeltefagområder. Det betyr at lønnsveksten ikke vil tiltavesentlig, men holde seg relativt høy, det vil si i overkantav 4 % i årene som kommer. Sammen med god vekst iinnenlandsk etterspørselsvekst og en relativt stabil kronetilsier det at inflasjonen vil tilta i årene som kommer.Underliggende inflasjon kan komme opp i 2 % i løpet avprognoseperioden, fra dagens 1 %, men kostnadsveksten Tiltagende inntektsvekst tilsier høyer forbruksvekstmå trolig bli sterkere for at inflasjonen skal komme overmålet på 2 ½ %.Langsom renteoppgangGod vekst, et relativt stramt arbeidsmarked, noe høyereinflasjon og noe lysere utsikter internasjonalt tilsier atNorges Bank ønsker å sette opp renten iprognoseperioden. Fortsatt stigende boligpriser oggjeldsvekst fra et høyt nivå tilsier også at rentene ønskesnoe opp. Men en inflasjon som fortsatt er under målet ogen vekst i økonomien om lag på linje med veksten ikapasiteten tilsier at Norges Bank ikke vil ha hastverk.Uten renteøkninger i nabolandene vil en aggressivøkning hos oss gi svært sterk krone og gjøre atinflasjonen igjen falle lenger under målet. Tilbudet holder nesten følge med etterspørselenNår dette skrives har NOK styrket seg relativt mye motEUR, men målt med NOKs importveide verdi erstyrkingen langt begrenset. Vi regner med at NorgesBank setter opp renten to ganger neste år uten at det vilføre til en varig videre kronestyrking. I 2014 kan takten irenteøkningene økes noe, men siden vi venterrenteøkninger også i andre land, kan Norges Banksøkninger skje uten at trykket mot en sterkere krone bli forstort.Det er en klar risiko for at en høy innenlandsketterspørselsvekst gir større kapasitetsproblemer, høyerelønnsvekst og dermed etterhvert høyere inflasjon enn viventer. Da vil Norges Bank gå fortere fram med Ikke så sterk krone importveidrenteøkningene og akseptere at det slår ut i en sterkerekrone. Kronestyrkingen vil bidra til å hindre atinflasjonen skyter over målet. Dersom Norges Bankvelger å legge mindre vekt på å nå inflasjonsmålet ogmer på å hindre for sterk boligprisstigning og videregjeldsvekst hos husholdningene, kan vi også få enkombinasjon av høyere renter og sterkere krone. Det erimidlertid ingen ting i retorikken fra sentralbanken somtyder på en slik endring i bankens prioriteringer er påtrappene.Erik Bruceerik.bruce@nordea.com +47 2248 44499 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 9. ■ NorgeDerfor faller ikke eksporten Norsk eksport har holdt seg overraskende godt oppe Eksporten holder seg oppe Eksporten av tjenester har økt markert etter 2009 Fiskeeksporten har økt i viktighet Men verkstedprodukter og metaller dominerer Eksporten går til land som klarer seg greit Eksporten av maskiner til Asia har tatt seg oppLangt bedre enn fryktetNorsk eksport har holdt seg overraskende godt oppe tiltross for krise i Europa og svake tendenser globaltgjennom fjoråret og dette året, se figur. Sammenlignetmed toppnivået før finanskrisen er eksporten avtjenester faktisk opp 15 % mens eksporten av Mer fisktradisjonelle varer fortsatt ligger 5 % under etter å habeveget seg mer eller mindre sideveis siden 2009.Eksport av tjenester veier tungtNår det snakkes om norsk eksport er det nestenutelukkende fokus på produksjon og eksport av varer.Men eksporten av tjenester er nesten like stor someksporten av tradisjonelle varer og får ufortjent liteoppmerksomhet. Eksporten av tjenester har økt kraftigetter finanskrisen og gitt viktige bidrag til BNP-veksteni Fastlands-Norge.Utenriks sjøfart utgjør en sentral del tjenesteeksporten,men har ikke bidratt til noe vekst etter 2007. Vekstenhar vært innen eksport av «forretnings-, profesjons- og Verkstedprodukter viktigeretekniske tjenester», «petroleumstjenester» og «leie-arbeid og reparasjoner». Det er tydelig at Norge harekspertise innenfor disse typer tjenester som trosserbåde sterk krone og høye lønnskostnader.Fisk er blitt viktigereInnen eksport av tradisjonelle varer har det skjeddbetydelige endringer i sammensetningen de siste 40årene. Ser man på hovedkategoriene har eksporten avprodukter fra jordbruk, skogbruk og fiske tatt segkraftig opp og økt som andel av tradisjonell eksport(målt i verdi) fra i overkant av 2 % i 1970 til 8-9 % desiste par årene, se figur. Utviklingen innenlakseoppdrett er årsaken til denne kraftige veksten.Industriprodukter utgjorde 89 % av eksporten av Eksport av maskiner - viktigste kategorier og undergruppertradisjonelle varer i 2011, ned fra 93,8 % i 1970. Det er (Andel av eksport av maskiner i 2011 gitt i parentes)særlig i perioden fra finanskrisen i 2007/2008 at 1. Andre industrimaskiner (23,4 %)eksport av fisk har økt sin relative betydning som - Pumper for væskeeksportnæring. En stadig økende fiskeeksport, også - Mekanisk utstyr for håndtering av godsgjennom finanskrisen, bidrar til å holde eksporten 2. Maskiner for spesielle industrier (21,3 %)oppe. - Anleggsmaskiner og -utstyr - Andre maskiner for spesielle industrier ikke ellers nevnt 3. Elektriske maskiner og apparater (20,4 %) - Utstyr for overføring av elektrisitet10 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 10. ■ NorgeMen verkstedprodukter og metaller råder Eksporten går ikke til kriserammede landInnenfor eksporten av industriprodukter har det ogsåvært nokså store endringer i sammensetningen.Metaller er fortsatt en av Norges viktigste eksportvarer,men andelen har sunket de siste 40 årene. I 1970utgjorde metaller hele 34,3 % av eksporten avtradisjonelle varer, mens i 2011 var andelen 22,4 %.Aluminiumslegeringer og nikkel er viktigst og står fornesten halvparten av metalleksporten.Verkstedprodukter er på den annen side blitt stadigviktigere og utgjorde i 2011 en like stor andel aveksporten som metaller, opp fra 12 % i 1970.Verkstedprodukter omfatter alle typer industrimaskiner Ingen resesjon hos våre viktigsteog -utstyr. I tabellen på forrige side har vi listet opp detre viktigste kategoriene innenfor eksport av maskiner.Gjennom finanskrisen og den svake perioden de sistepar årene har det vist seg at sammensetningen avvareeksporten er mindre konjunkturfølsom enn i f.eks.Sverige.Eksporten går til landene som klarer seg greitSelv om andelen har sunket er det fortsatt Europa somer vårt viktigste eksportmarked med en andel på 76 % i2011. I utgangspunktet skulle man ventet at gjeldskriseog resesjon i Europa ville virket sterkt negativt påeksporten fra Norge. Som nevnt innledningsvis har Kraftig ned, men på vei opp igjeneksporten holdt seg bemerkelsesverdig godt oppe. Éngrunn til det er at lite av norsk eksport går til de hardestrammede økonomiene i Europa. Med unntak avStorbritannia har alle våre 10 viktigsteeksportmarkeder (se figur) så langt unngått en nyresesjon etter finanskrisen. Det har vært svak vekst,men ingen dyp nedtur, se figur.Mer maskiner til Asia og Sør-AmerikaTil Asia er det maskiner som er viktigste eksportvaremed en andel i 2011 på 31,2 %, ned fra hele 50 % i2009. Eksporten av maskiner til Asia falt markert i2010 og 2011, men har tatt seg opp igjen så langt i Eksport av fisk trekker opp2012 og har nok bidratt til veksten i norsk eksport iførste halvår, se figur. Et markert oppsving i eksportenav maskiner til Sør-Amerika i samme periode har ogsågitt positive bidrag selv om eksporten til den regionener langt mindre.Med andre ord flere grunner til at det går braDet er flere grunner til at norsk eksport ikke har faltsom følge av krisen i Europa:  Eksporten av tjenester har hatt en svært positiv utvikling de siste årene.  Sammensetningen av vareeksporten mindre konjunkturfølsom. Fisk trekker mye opp.  Våre viktigste eksportmarkeder har unngått en Katrine Godding Boye ny nedtur etter finanskrisen. katrine.boye@nordea.com +47 22 48 79 77  Eksporten av maskiner har økt i det siste, særlig til Asia og Sør-Amerika, regioner som opplever relativt sterk vekst. Michael Hurum Cook michael.hurum.cook@nordea.com11 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 11. ■ SwedenHouseholds prop up the economy GDP growth edging higher in coming years … Households keep the wheels turning Household finances are generally stable. A low inflation … but near term, the labour market will weaken level and pay rises jack up households’ purchasing pow- Long period of low inflation er. Real disposable incomes will rise by about 2% annu- ally in 2012-2014. The improved household finances Riksbank to cut rates this year, and the SEK weakens have fed through to the housing market. House prices have started to rise again after having shown a slightlyGood growth weak trend over the past year. Share prices are also im-The Swedish economy has been surprisingly resilient to portant for households’ propensity to spend, and sincethe global turbulence. GDP growth did drop towards the the turn of the year stock markets have recovered some-end of 2011, but both the GDP and employment rose what. The conditions for households are therefore benignagain during H1 2012. The domestic economy was the so we expect consumer spending to rise noticeably inkey driver of growth, but also foreign trade improved. coming years.Growth in H1 2012 was fairly high, we think, despite thepossibility of a downward revision to Q2 GDP growth. Investment activity lost pace in Q2 2012 after rising sharply at the beginning of the year. There are indicationsAlthough the economy has been able to tackle the global that capacity utilisation in several sectors has declined,obstacles better than expected, GDP growth is still not which reduces the need for new investment. In addition,sufficiently high to prevent a decline in the demand for investment appetite seems suppressed by the dark cloudslabour. We expect unemployment to rise above 8% dur- still hanging over Europe. The number of housing startsing the winter. has already dropped sharply, and total investment will show a weak trend in coming quarters. We expect theProspects for H2 2012 are mixed. We will likely see sub- general need for investments to be modest during most ofdued growth. However, longer out there are factors sug- next year and then increase in 2014 in tandem with thegesting a pick-up in activity. A benign situation for overall pick-up in activity. An expansionary fiscal policyhouseholds, a slightly more expansionary economic poli- partly based on infrastructure investment will contributecy and a global economy that gradually recovers are the to underpinning investment growth over the forecastfactors that will underpin higher GDP growth in coming horizon.years. However, due to global weakness growth will onlyaccelerate slowly and unemployment will not decline un- Tough times for the export industrytil the latter part of the forecast period Despite some improvement recently, exports of goods have stagnated over the past year. The order intake re-Sweden: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (SEKbn) 2010 2011 2012E 2013E 2014EPrivate consumption 1,533 3.7 2.0 1.7 2.0 2.1Government consumption 860 1.9 1.8 0.8 0.5 1.5Fixed investment 559 7.7 6.2 2.5 1.0 3.5 - industry 74 1.0 7.9 -2.2 2.2 4.4 - residential investment 92 17.2 15.1 -8.7 -2.2 4.5Stockbuilding* -46 2.1 0.6 -1.1 0.1 0.0Exports 1,489 11.7 6.9 1.2 4.2 4.9Imports 1,288 12.7 6.3 -0.4 3.8 5.1GDP 6.2 3.9 1.2 1.8 2.3GDP, calendar adjusted 5.9 3.9 1.5 1.8 2.4Nominal GDP (SEKbn) 3,106 3,331 3,492 3,580 3,703 3,836Unemployment rate, % 8.4 7.5 7.7 8.0 7.7Employment grow th 1.0 2.1 0.3 -0.2 0.8Consumer prices, % y/y 1.2 3.0 1.2 1.2 2.0Underlying inflation (CPIF), % y/y 2.0 1.4 1.1 1.5 1.5Hourly earnings, % y/y 0.4 2.9 3.3 3.2 2.8Current account (SEKbn) 225 243 259 280 288- % of GDP 6.8 7.0 7.2 7.6 7.5Trade balance, % of GDP 2.6 2.7 2.9 3.0 2.7General govt budget balance (SEKbn) -2 5 -12 -38 -18- % of GDP -0.1 0.1 -0.3 -1.0 -0.5Gross public debt, % of GDP 39.4 38.4 38.1 39.1 39.6* Contribution to GDP growth (% points)12 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 12. ■ Swedenmains weak, and growth in many key export markets is Rising incomes and consumptionlow. Accordingly, goods exports will likely remain sub-dued during the remainder of 2012. Also the strong SEKis a problem for exporters. However, it probably affectsprofitability rather than volumes. The situation will im-prove longer out as the SEK will likely weaken and de-mand gradually rise.Sweden’s trade in services, which has increased sharplyso far this year, is gaining significance. Exports of ser-vices have risen from 6% of GDP in 1980 to currently15% of GDP. The export markets for services are largelyidentical to those for goods – where demand is weak.This suggests that the pick-up in H1 was temporary andwill lose momentum going forward. Weak global demand a drag on Swedish exportsLow inflation puts pressure on the RiksbankDespite an increase in the number of employed this yearthe labour market still shows signs of weakness. The de-mand for labour has not been sufficiently strong to keepunemployment in check. Labour market indicators arestill at benign levels, but have started to soften. We lookfor a decline in employment and accelerating growth inunemployment during autumn and winter.Labour market weakness is usually accompanied by re-duced domestic inflation. Also, the SEK strengtheninghelps putting a lid on costs. Inflation pressures thus lookset to moderate even further in future, extending the peri-od of core inflation markedly below the 2% target. This Reduced pressure on domestic marketmay cause some concern for the Riksbank as it couldcontribute to further accelerating the decline in inflationexpectations.The door is thus open for monetary easing. With low in-flation, a weaker labour market, low policy rates interna-tionally and a risk of further SEK appreciation, the Riks-bank should cut rates this year. But when the economystarts to recover in the latter part of 2013, the bank willembark on a hiking cycle.A paradigm shift for the SEKThe SEK has become a safe-haven currency in 2012. Thereasons are the modest exposure of the Swedish economyto troubled areas, solid public finances and a highly Paradigm shift for SEKcompetitive business sector that generates surprisinglystrong growth and increased interest rate differentials.Going forward, we expect the SEK to weaken versus theEUR in step with a gradual stabilisation of the situationinternationally and a narrowing of interest ratedifferentials. However, EUR/SEK will remain at levelsbelow 9 throughout the forecast period. The USD willcontinue to strengthen against most currencies, includingthe SEK.Torbjörn Isakssontorbjorn.isaksson@nordea.com +46 8 614 885913 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 13. ■ DenmarkLanguishing economic growth Rising activity towards 2014 Despite the prospect of a historically high savings ratio our forecast assumes that consumer spending will Housing market improvement gradually increase towards the end of 2014. The Delayed effect from public money flow accelerating consumer spending growth will partly be driven by a pent-up consumption need and partly by Negative central bank rates work generally improved sentiment about the Danish economy. Not least the prospect of increasingLow growth and significant uncertainty characterise the employment and a pick-up in the housing market willDanish economy; activity has been stuck at largely the boost Danish households’ propensity to consume oversame level since the autumn of 2010. Over coming the forecast period.quarters, we expect the Danish economy to graduallyreturn to the growth track this year, expanding at a rate of Housing market shows signs of healing0.7% this year, accelerating to 1.9% in 2013 and 2.1% in Since mid-2008 the ailing housing market has been a2014. millstone around the neck of the Danish economy. The contracting housing wealth, slower credit growth andOn the domestic front the expected reversal of economic historically low activity in the construction sector aretrends will be driven by households’ large pent-up some of the main reasons why consumer spending haspotential, which will gradually turn into growing stagnated. However, the latest monthly property priceconsumer spending. At the same time, growth is data from Statistics Denmark suggest that housing pricesunderpinned by a delayed effect from the public sector, have stabilised since the start of the year. We believe thiswith expected positive contributions from consumer development marks the beginning of a new regime in thespending and investment. Danish housing market where the historically low funding costs and substantial pent-up demand over timeConsumers hang on to their money will lead to market consolidation.Although the payout of saved-up early retirement moneyis close to DKK 20bn (already surpassing official But prices will be kept in check by a still large supply offorecasts), the effect on retail sales and consumer unsold homes, low turnover and high youthspending has so far not materialised. Instead many have unemployment, which limits the number of first-timechosen up save up more; total household bank deposits buyers. Trapped between these two opposing trends,have swelled to an all-time high. The Danish economy housing prices are likely to remain more or lesstherefore lacks the boost to activity that normally results unchanged during the rest of the year. Into 2013 wefrom consumer spending. Moreover, the government’s expect housing prices to slowly edge higher, surpassingscope for stimulating economic activity through its tax expected inflation again in 2014. The moderately risingpolicy is limited. housing prices will first and foremost be concentrated in the large cities where demographics suggest growingDenmark: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (DKKbn) 2010 2011 2012E 2013E 2014EPrivate consumption 815 1.9 -0.8 0.6 1.8 1.9Government consumption 497 0.3 -1.3 0.4 0.8 0.8Fixed investment 314 -3.7 0.2 2.8 4.0 4.7 - government investment 33 8.5 5.2 8.5 -12.0 2.5 - residential investment 80 -7.4 8.8 -5.8 4.7 5.0 - business fixed investment 201 -4.4 -3.8 5.0 7.1 4.9Stockbuilding* -20 0.1 0.0 0.0Exports 794 3.2 7.0 2.0 2.9 3.5Imports 731 3.5 5.2 2.6 3.6 3.6GDP 1.3 0.8 0.7 1.9 2.1Nominal GDP (DKKbn) 1,668 1,772 1,783 1,818 1,879 1,949Unemployment rate, % 6.3 6.2 6.3 6.4 6.2Gross unemployment level, 000 persons 164.5 162.1 165.0 168.7 163.2Consumer prices, % y/y 2.3 2.8 2.4 2.0 2.2Hourly earnings, % y/y 2.3 1.8 1.8 1.9 2.1Nominal house prices, one-family, % y/y 2.8 -2.8 -4.3 1.2 1.9Current account (DKKbn) 96.9 119.1 105.0 95.0 85.0- % of GDP 5.5 6.7 5.8 5.1 4.4General govt. budget balance (DKKbn) -47.4 -34.5 -71.0 -40.0 -10.0- % of GDP -2.7 -1.9 -3.9 -2.1 -0.5Gross public debt, % of GDP 42.9 46.6 45.5 44.5 43.0* Contribution to GDP growth (% points)14 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 14. ■ Denmarkupward pressure on demand. Stagnant consumptionNegative central bank rates a successDuring the debt crisis the Danish central bank has beenforced to pursue a very proactive monetary policy tokeep the DKK stable versus the EUR. As a vital part ofthis defence, the central bank cut its CD rate to -0.20% inearly July. It is the first time in Denmark’s history thatthe CO rate is in negative territory. So far this move hashad the desired effect. The DKK has stabilised at a solidlevel against the EUR without the central bank needingto intervene in the market. This contrasts sharply with thesituation in May and June when more than DKK 36bnwas sold to defend the Danish fixed exchange rateregime.Public money flow drying out The central bank’s CD rate is negativeIn a bid to break the current economic deadlock thegovernment has decided to bring forward publicinvestment projects to the tune of DKK 19bn. At thesame time public spending is budgeted to grow by DKK18bn this year and an additional DKK 8bn in 2013 –corresponding to real growth of 1.5% and 0.1%,respectively. Despite these intentions public spendingdecreased by 1.0% in H1, while public investment onlyincreased very modestly. So the Danish economy has sofar not received the originally planned boost from fiscalpolicy. The explanation to this sluggishness should befound in the long implementation period for publicinvestment and in the fact that public-sector spendinghistorically has been very difficult to fine-tune. Against Improved competitivenessthis background, there is a likelihood of a strong ketchupeffect in coming quarters, which will help pull the Danisheconomy out of the doldrums provided that thegovernment fulfils its own plans.Improved competitiveness drive exports forwardAfter a brief dip at the beginning of the year, exports aregrowing again – partly driven by sustained growth in keyexport markets, partly by improved competitiveness.This is chiefly a result of a weakening of the trade-weighted DKK, which has made Danish productscomparatively cheaper in international markets.But also the past year’s sharp drop in the pace of wagegrowth combined with productivity gains means that unit Decoupling between employment and house priceslabour costs now increase more slowly than inDenmark’s key export markets. And although the effectof the lower unit labour costs will not feed though untilslightly longer out, it is a vital precondition formaintaining the necessary momentum in exports.Helge J. Pedersenhelge.pedersen@nordea.com +45 33333126Jan Størup Nielsenjan.storup.nielsen@nordea.com +45 3333317115 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 15. ■ Finland Finnish economy has cooled down across the board Exports will not recover until 2013 sector, for instance, turned down again in the first half of the year. In our forecast, we assume export volumes to Growth in private consumption will slow down continue declining in the latter part of the year. The Employment will fall less than previously forecast decreasing world trade growth will weaken production expectations globally and decrease investment needs. Public sector deficit will decrease This is bad news to the Finnish export industry, as its main products are raw materials, production supplies andAs expected, economic activity has decreased in Finland investment goods. We expect international demand toacross the board after the first quarter of this year. strengthen moderately in 2013. Export volumes willExports have contracted, investment has continued to increase but growth will still remain modest.decline and the growth in private consumption hasslowed down. Imports have decreased more than exports, Growth in private consumption to slow downwhich is, in particular, a sign of weakening in domestic Private consumption increased at a brisk pace in Q1 thisdemand. What is positive, is that employment has not yet year compared to Q4 2011. This was a result of the one-weakened. However, it is probably only a question of off additional salary items based on collectivetime before it does. agreements, which boosted retail sales, and the car tax hike that entered into force at the beginning of April,Based on preliminary data, the economy contracted in Q2 which made people purchase new cars earlier than theycompared to the previous quarter. Our forecast assumes otherwise would have. The growth in retail sales volumesthat the decline continues in Q3. This means that we slowed down markedly in Q2 and in July it stoppedbelieve the Finnish economy is in recession, just like altogether. Car sales, too, have decreased sharply.many other European countries. As in our previous Thanks to the strong beginning of the year, privateforecast, however, we believe the recession will not last consumption will significantly boost the economiclong and there is no need to change the previous GDP growth this year despite the recent cooling.growth forecast of 0.8% for this year. On the other hand,international trade has cooled down more than expected, For the remaining part of the year and for 2013, thewhich indicates that an export-led recovery from the outlook for private consumption will remain weak. Therecession will be much slower than previously estimated. increase in salaries and pensions as well as the decreaseThat is why we have lowered our forecast for economic in mortgage interest rates will support householdsgrowth in Finland in 2013 to 1.2% (previously 1.6%). In purchasing power. The growth in purchase power will,2014, we expect growth to speed up to 2.8% as especially however, be restrained by tax increases and the expectedthe North-European economies will recover. weakening in employment. Taxes will increase as the value added tax will be raised and no inflationExports will not recover until 2013 adjustments of income limits will be made in the incomeFinnish goods exports have varied widely over the past tax brackets. In addition, the rather rapid growth inyear – and the variation has taken place around a consumer prices will continue and erode purchasingdecreasing trend. New orders received by the industrial power. Consumer prices are expected to rise by 2.5%Finland: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (EURbn) 2010 2011 2012E 2013E 2014EPrivate consumption 94 3.3 2.5 2.2 1.3 2.0Government consumption 43 -0.3 0.4 0.3 0.5 0.5Fixed investment 34 1.9 6.8 -3.2 0.6 3.8Stockbuilding* -2 0.5 1.1 -0.3 0.3 0.1Exports 64 7.5 2.6 -1.7 2.6 7.1Imports 62 6.9 5.7 -3.0 2.9 6.2GDP 3.3 2.7 0.8 1.2 2.8Nominal GDP (EURbn) 172.3 178.8 189.4 196.0 201.6 210.1Unemployment rate, % 8.4 7.8 7.7 8.0 7.9Industrial production, % y/y 8.3 0.9 -3.0 2.0 4.0Consumer prices, % y/y 1.2 3.4 3.0 2.5 2.3Hourly w ages, % y/y 2.6 2.7 3.5 3.0 3.0Current account (EURbn) 2.9 -2.2 -0.5 0.4 1.2 - % of GDP 1.6 -1.1 -0.2 0.2 0.6Trade balance (EURbn) 2.6 -1.2 -0.1 0.1 0.8 - % of GDP 1.4 -0.6 -0.1 0.0 0.4General govt budget balance (EURbn) -4.5 -1.2 -1.0 -0.1 1.0- % of GDP -2.5 -0.6 -0.5 -0.1 0.5Gross public debt (EURbn) 90.0 93.0 99.0 104.1 108.4- % of GDP 50.3 49.1 50.5 51.6 51.6* Contribution to GDP growth (% points)16 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 16. ■ Finlandnext year. The household savings rate continues to Cooling of world trade brings problems to exportsdecline which means that an increasing part of income isused for consumption. The accommodating monetarypolicy is well timed as the consumption outlook wouldbe much gloomier without it.Investment to decline, employment to weakenThe bleak short-term outlook for exports, production andconsumption as well as the major uncertainty over theEuro area developments will eat away economic agentsconfidence and thus decrease willingness to invest andweaken employment prerequisites. Machinery andequipment investment increased sharply last year butturned down again already in the beginning of this year.The decline is expected to continue at least for the rest of Weak sentiment points to an outright fall in GDPthis year. Construction investment is also expected todecline. The decrease in the number of grantedconstruction permits indicates that the decline inresidential and other construction will continue and evensteepen during the latter part of the year. Reconstructionwill compensate for the decline in new construction.We expect both the traditional machinery and equipmentinvestment and construction investment to increase againin 2013. A precondition for this, however, is that theglobal economy will grow as forecast, the Euro area debtcrisis will clear up and confidence will return.The labour market has provided very positive surprisesthis year. Employment measured with the number of A decline in GDP is bad news for employmentpeople has not weakened (although the number ofworking hours has probably started to decrease) and thenumber of unemployed people has not started to increase.Seasonally adjusted unemployment rate has stabilised at7.5% in recent months. The unemployment rate for 2012seems to remain at 7.7% (the previous forecast was8.0%), which is lower than in 2011. We still expectunemployment to increase, especially in 2013 with theunemployment rate rising to an average of 8%.Slower decrease in public sector deficitTax revenues will increase at a slower pace due to thesluggish economic growth, even though income taxationwill be tightened and value added tax will be raised. Thepublic sector deficit will, however, continue to decline. Confidence + labour market = weak consumptionThe deficit is estimated to decrease to 0.1% of GDP in2013 and turn into a small surplus in 2014. Thegovernments annual borrowing need will remain at EUR4–6bn during the forecast period, which will increase thepublic debt close to 52% of the value of total productionalready in 2013.Pasi Sorjonenpasi.sorjonen@nordea.com +358 9 165 5994217 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 17. ■ USAMoving slowly forward If a perfect storm of fiscal chaos is avoided … After all, the economy’s fundamentals are much im- proved. Businesses are highly profitable, banks have re- ... progress towards full employment in 2014 capitalised and the deleveraging process in the private Stronger underlying inflation pressures set to emerge sector has come a long way. Still, households – especially younger families – are likely to continue the Fed to start tightening by mid-2014 process of balance sheet repair. Home prices seem to have bot-tomed, but the expected slow price increasesUS economic growth is likely to remain moderate in the provide lim-ited support to household net worth goingnext few years through 2014, constrained by household forward.deleveraging, fiscal restraint, subpar global demand,slower working-age population growth and a deteriora- In 2014 growth is expected to slow to a pace more in linetion of job skills. with potential. Full employment, defined as an unem- ployment rate of 7%, should be achieved in late 2014.The US economy clearly lost momentum during Q22012, but recent economic data paint a slightly brighter QE3 only in case of policy errorspicture, pointing towards GDP growth of 1½-2% in H2 The effects of the drought in the Midwest on food com-2012. Stronger disposable income growth, easier finan- modity prices and a rebound in oil prices are likely tocial conditions and bank lending standards, continued push headline inflation meaningfully higher by mid-housing recovery, the end of the payback for the warm 2013.winter weather and less drag from seasonal adjustmentdistortions suggest that economic momentum will pick With the business cycle adjustment more or less com-up slightly in the near term. pleted in 2014, signs of stronger underlying inflation pressures are projected to emerge in the latter part of theHowever, while the threat from the Euro-area crisis cur- forecast horizon. As a result, we expect the Fed to startrently appears less menacing, US fiscal challenges raising policy rates and gradual unwind its securitiesaround the end of this year imply that risks to the US holdings around mid-2014.outlook over the next two to three quarters remain tiltedto the downside. The probability of another US recession In the more immediate future, however, the Fed is likelyis uncomfortably high at 20-25%, in our view. later this month to postpone the expected first rate hike from late 2014 to mid-2015. In our view, the central bankOn the other hand, an orderly resolution of the pending is currently overestimating the labour market slack andfiscal issues, as assumed in our baseline scenario, should hence underestimating the longer-term risk of inflation.pave the way for stronger confidence and hence brighter Additional asset purchases (QE3) by the Fed are noteconomic prospects in 2013, when growth is projected to expected unless the Euro-area crisis blows up again or ifexceed potential assumed at around 2% annually through US policymakers fail to resolve the pending fiscal issuesmost of the year. in an orderly manner.USA: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (USDbn) 2010 2011 2012E 2013E 2014EPrivate consumption 9,845.9 1.8 2.5 1.9 2.0 2.1Government consumption and investment 2,967.2 0.6 -3.1 -2.0 -0.9 -0.3Private fixed investment 1,703.5 -0.2 6.6 9.4 6.9 6.9 - residential investment 354.2 -3.7 -1.4 11.7 9.4 12.4 - equipment and softw are 898.3 8.9 11.0 8.3 6.9 6.0 - non-residential structures 451.1 -15.6 2.8 10.2 4.5 3.5Stockbuilding* -154.2 1.5 -0.2 0.2 0.1 0.0Exports 1,587.5 11.1 6.7 4.3 5.2 5.3Imports 1,976.2 12.5 4.8 4.2 5.7 5.4GDP 2.4 1.8 2.2 2.0 2.2Nominal GDP (USDbn) 13,973.7 14,498.9 15,075.7 15,716.1 16,276.1 16,885.0Unemployment rate, % 9.6 9.0 8.1 7.7 7.3Industrial production, % y/y 5.4 4.1 4.0 4.0 4.3Consumer prices, % y/y 1.6 3.1 2.1 2.2 2.2Consumer prices ex. energy and food, % y/y 1.0 1.7 2.1 2.2 2.2Hourly earnings, % y/y 1.8 2.0 2.2 2.1 2.2Current account (USDbn) -442.0 -465.9 -471.5 -569.7 -506.5 - % of GDP -3.0 -3.1 -3.0 -3.5 -3.0Federal budget balance (USDbn) -1,293.5 -1,300.0 -1,100.0 -900.0 -700.0- % of GDP -8.9 -8.6 -7.0 -5.5 -4.1Gross public debt, % of GDP 95.2 99.5 106.5 112.0 116.2* Contribution to GDP growth (% points)18 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 18. ■ USAA perfect storm of fiscal chaos hopefully avoided Moving slowly forwardThree US fiscal issues pose a threat to the economic out-look: the so-called fiscal cliff, another increase in theTreasury debt ceiling and the need for longer-term fiscalsustainability.As we approach the end of the year, attention will focuseven more sharply on the risk of the fiscal cliff – the un-fortunate coincidence of about USD 600bn in tax in-creases and spending cuts that will take effect next year,should Congress not act to change current law. Failure toscale back the fiscal cliff could knock as much as 4¼%off real GDP in 2013, enough to push the US economyback into recession. Moreover, the Treasury is likely tohit the debt ceiling again in December. Assuming it uses Slow progress towards full employment in late 2014the accounting strategies that have been employed in thepast, the Treasury seems likely to be able to finance gov-ernment operations under the current limit until some-time in February 2013, by which point Congress mustraise the debt ceiling. Failure to do so would imply de-fault on some of the US government’s obligations.With both political parties in full campaigning mode,none of these issues are likely to be resolved before thepresidential elections on 6 November. As seen too oftenduring the past two years, there will most likely be plentyof political brinkmanship and the accompanying uncer-tainty will probably come at a cost to the economy andthe financial markets later this year and in early 2013.The longer the uncertainty persists, the more likely it will Stronger underlying inflation pressures in 2014hurt confidence, hiring, investment and spending.However, our expectation is that when pressured by thethreat of another recession, policymakers will take actionto reduce the fiscal drag on growth (to around 0.5% ofGDP) either during the so-called lame duck session afterthe election or in January when the new governmenttakes office. Obviously, the outcome of the Novemberelections will be very crucial to how the fiscal debateplays out. In this context, the congressional election re-sults will be at least as important as who wins the WhiteHouse, Obama or Romney.Extending the otherwise expiring tax cuts and other eas-ing measures and repealing the automatic federal spend- Recession if economy is pushed off the fiscal cliffing cuts would significantly reduce the risk of recession, 1 1 % points Fiscal policy impact on GDP growth % pointsbut at the cost of a substantially larger budget deficit. 0 0Thus, with an extension of current policy federal debtheld by the public would rise from 70% of GDP today to -1 -1around 90% by 2022 compared to around 60% if current -2 -2law is not changed. In other words, apart from resolvingthe fiscal cliff issue and raising the debt ceiling -3 -3policymakers will also soon have to address the need to -4 -4restore longer-term fiscal sustainability in order to shift Current law Current policythe risk to the economic outlook from negative to -5 -5positive. 2011 2012 2013 Source: Nordea Marktes, Congressional Budget Office and Office of Management and BudgetJohnny Bo Jakobsenjohnny.jakobsen@nordea.com +45 3333 617819 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 19. ■ Euro areaRestore confidence to end the recession Gradual recovery from year-end Restoring confidence is key to recovery Why do we expect a recovery when numerous problems Helped by smarter interventions remain unsolved and deleveraging has only just begun? Significant downside risks to inflation Well, because we believe that decisions have been taken and will be taken in the coming months that are decisive Spain heading for deeper recession and will help gradually restoring confidence in the Euro area. After all, monetary policy is extremely lenient, ex-The Euro area is in recession. The second quarter showed port markets are growing decently, the EUR isGDP contraction and the third quarter most likely will weakening and even if more fiscal tightening will betoo. We expect a recovery starting around year-end and a needed in the years to come at least the pace ofvery gradual pick-up of momentum during 2013. In 2014 tightening will be slower. Confidence is the missinggrowth will still be somewhat below the pre-crisis ingredient that will al-low these factors to work and pave“normal” level. the way for a very gradual recovery.We have made a modest upward revision to growth this Restoring confidence takes more time than eroding it,year, but otherwise kept the Euro-area forecast roughly and we do not in any expect that the debt crisis is aboutunchanged compared with our May forecast revision. We to end. Solving the crisis requires massive deleveraginghave revised down our growth forecast for Spain in 2013 in the years to come, structural reforms, growth andafter the announcement of new austerity measures during building new credible institutions to prevent the samethe summer. kind of crisis from happening again. Restoring confi- dence also requires that Greece starts implementing theRecovery from year-end reforms agreed with the Troika.It is fair to say that signs of recovery have been scant upto this point. However, the most forward-looking indica- Interventions will work this timetors for growth in the Euro area as a whole have at least In terms of the decisive action, the ECB seems ready tostopped falling and stabilised at low levels. bring out Big Bertha – more or less the entire arsenal of instruments is being considered. We believe ECB inter-The contraction in Q2 was not as severe as one might ventions in the secondary market – done smarter thishave expected given the financial stress during that peri- time – combined with intervention in the primary marketod with Greek post-election chaos and a Spanish bank by the EFSF/ESM will reduce the level of stress in finan-bailout. Some lagged adverse impact on the economy is cial markets and help restore the confidence that is need-likely to be visible in the Q3 growth numbers, but we ex- ed to embark on a path to recovery.pect Q3 to mark the bottom of the current business cycle. When the ECB intervened through its old programme (the SMP) it did not work very well. Rather it reducedAnother reason that the Q2 numbers were not as bad as the incentive for eg Italy to do the right thing. Therefore,feared is Germany. German growth remained resilient interventions to reduce financial stress never becameduring the first half of the year driven to a large extent by credible. This time, the ECB will intervene with strictthe export sector and to some extent also the German conditionality – ie only in countries that have a bailoutconsumers. At present, the survey-based indicators point programme with promises to reduce budget deficits andto slightly negative growth in Germany in Q3.Euro area: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (EURbn) 2010 2011 2012E 2013E 2014EPrivate consumption 5,128 0.9 0.2 -0.8 -0.4 0.3Government consumption 1,987 0.7 -0.3 0.2 -0.9 -0.8Fixed investments 1,735 -0.2 1.6 -3.0 1.1 2.4Stockbuilding* -48 0.7 0.3 -1.2 -0.1 0.5Exports 3,272 11.0 6.3 1.6 4.9 1.6Imports 3,155 9.4 4.1 -2.3 2.9 1.4Net exports* -0.8 0.7 1.0 1.6 1.0 0.2GDP 1.9 1.5 -0.4 0.6 1.7Nominal GDP, EUR bn 8,917 9,155 9,410 9,512 9,725 9,804Unemployment rate, % 10.1 10.2 11.3 11.6 10.6Industrial production, % y/y 4.3 2.7 -2.6 2.9 5.8Consumer prices, % y/y 1.6 2.7 2.2 1.6 1.6 - core inflation** 1.0 1.7 1.6 1.2 1.0Hourly earnings, % y/y 1.6 2.2 2.3 2.2 2.1Current account, bn EUR -3.2 -1.1 33.1 21.0 17.0Current account, % of GDP 0.0 0.0 0.3 0.7 1.0General government budget balance, % of GDP -6.2 -4.1 -3.7 -3.0 -2.5General government gross debt, % of GDP 85.3 87.2 90.9 93.9 96.4* Contribution to GDP growth (% points)20 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 20. ■ Euro areaundertake reforms – which will make actions on both Gradual recovery from year-endsides more credible. The ECB can intervene in largeamounts and significantly reduce financial stress becausethe ECB does not have to rely on market pressure.Instead, the crisis bailout country will have tocontinuously meet the agreed conditions, or it not onlyrisks losing access to the cheap bailout loan but also tothe “free” ECB interventions.Within the next few months we expect Spain to ask forinterventions from the bailout funds and hence from theECB. Italy could follow late this year, as it could be away for the current premier to secure budget disciplinebeyond the April 2013 general elections. Such a politicalmanoeuvre could make the next government obliged to Confidence is crucialcontinuously meet the conditions that Mr Monti agreesupon to get ECB support, or the ECB stops intervening.Limited underlying inflationary pressureConsumer price increases are likely to remain above 2%in the coming quarters despite the ongoing recession.Higher food and energy prices as well as indirect taxhikes in some countries will keep the headline numberselevated. Underlying inflation will, however, graduallyfall throughout most of this year and 2013 before pickingup modestly in 2014. Risks are skewed significantly tothe downside throughout the forecast horizon. Upsiderisks to inflation from the very easy monetary policy areunlikely to materialise within our current forecasthorizon. Consumer price increases remain elevatedSpain heading for deeper recessionSince our most recent forecast update, Spain has taken aEUR 100bn bank bailout and announced new austeritymeasures totalling EUR 65bn until 2014. The bailout ofSpanish banks seems sufficient to cover near-term capi-talisation needs, as it has also been confirmed by inde-pendent consultants. However, the banking sector re-mains a key concern as the economy heads deeper intorecession.Key elements of the austerity package include a VAThike from 18% to 21% from September this year and cutsin benefits and public wages. As a consequence, we haverevised down our forecast for growth in both 2012 and Monetary policy is extremely lenient2013. On a more positive note, we do expect interventionin Spanish sovereign bonds by the ECB and the rescuefunds and a somewhat reduced level of financial stress.Anders Svendsenanders.svendsen@nordea.com +45 3333 395121 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 21. ■ United KingdomUK growth stalling – awaiting outside helpThe UK economy has been moving at stall speed lately. Stalling recoveryFour years after the Great Recession first hit the shores ofthe British Isles, the economy is still 4% below its pre-crisis peak and the economy has contracted for the pastthree quarters.Lately, several events have been heavily influencingeconomic key figures: The Queen’s Diamond Jubileegave an extra day off in Q2 that showed up as weaknessin the figures; the weather was horrid, which hasdepressed retail sales, and finally the 2012 Olympics isexpected to give an extra (albeit temporary) boost toconsumption and employment during Q3.We are somewhat puzzled by the development in the Capacity dwindlinglabour market. Employment has increased by 330k overthe past year and while some of those jobs most likelyare related to the Olympics, they have come too early.This could be an indication that the GDP figures areunderestimating actual growth or a sign of labourhoarding, which could pose a downside risk if theeconomy fails to gain traction.With the UK government’s continued focus ondownsizing the public sector, growth is expected to comefrom a normalisation in exports as export marketsrecover and a modest recovery in private consumptionand growing investment (as an aside, with this forecasttotal private consumption will still be 1% shy of the 2007level at the end of the forecast horizon). With industrial Growth slowly recoveringcapacity utilisation above 80%, we expect this to driveinvestment in new machinery.The Bank of England (BoE) will keep trying to supportthe economy through more asset purchases (we expectanother GBP 50bn to GBP 425bn) and the Funding forLending Scheme (FLS) which should give incentives forbanks to increase lending to the real economy.Steen V. GrøndahlSteen.grondahl@nordea.com +45 3333 1453United Kingdom: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (GBPbn) 2010 2011 2012E 2013E 2014EPrivate consumption 912.8 1.3 -1.0 0.1 1.7 2.4Government consumption 327.9 0.4 0.1 1.5 -2.0 -1.5Fixed investment 208.7 3.5 -1.4 0.6 3.2 6.3Stockbuilding* 0.9 0.3 -0.1 -0.1 -0.1Exports 404.2 6.4 4.4 -0.4 3.8 3.2Imports 424.8 8.0 0.5 2.3 3.3 4.1GDP 1.8 0.8 -0.4 1.0 1.7Nominal GDP (GBPbn) 1401.8 1466.6 1516.2 1548.1 1592.1 1641.1Unemployment rate, % 7.9 8.1 8.4 8.7 8.6Consumer prices, % y/y 3.3 4.5 3.0 2.2 1.4Current account, % of GDP -2.5 -1.9 -2.3 -2.1 -1.3General govt budget balance, % of GDP -10.4 -8.3 -7.6 -6.4 -4.7Gross public debt, % of GDP 75.7 82.9 89.3 93.2 95.1* Contribution to GDP growth (% points)22 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 22. ■ JapanThe challenges remain in the long termThe Japanese economy is undergoing a domestic-led re- The recovery is losing speedcovery. As a result of strong post-earthquake restorationactivity, the growth rate in the first half of 2012 averaged3.2%. The pace of recovery is likely to slow during theremainder of the year, with reconstruction spendingdwindling and private consumption decelerating asincentive programmes expire. In the meantime, sluggishexports to its major trading partners and Japan’sdependence on energy imports will continue weighing onits trade balance. As a whole, the economy will expandby 2.5% annually this year. We believe activity willdecelerate further in 2013 and 2014 to 1.6% and 1.1%.Private consumption has been the major driver behind therobust recovery earlier this year, thanks to incentive The tax hike will cause consumption frontloadingprogrammes for eco-cars. However, the budget for eco-car subsidies is likely to be used up very soon, so autosales will see a significant drop. As a result, privateconsumption is estimated to be close to zero by the endof 2012. Based on prior experiences, a consumption taxrate hike is likely to accelerate private demand in thequarters preceding its effective date. Thus, we expect tosee a considerable but temporary upswing in economicactivity in the period between late 2013 and early 2014due to the consumption tax rate hike effective from April2014.Reducing the public debt burden is a top priority, but thistask is complicated by low growth, persistent deflation,and a rapidly aging population. The consumption tax rate Social security biggest share of public expenditurehike effective from April 2014 is a first step towardsfiscal reforms, but it is far from sufficient to meet the re-quired adjustment of 10% of GDP over the next decade.The debt-to-GDP ratio can be stabilised through deepcuts in social security spending which is the largest andfastest growing component of government expenditure.Alternatively, the consumption tax could be hiked fur-ther. Currently, Japan has the lowest tax rate on con-sumption among OECD countries. However, both op-tions require strong political commitment.Amy Yuan ZhuangAmy.yuan.zhuang@nordea.com +45 3333 5607Japan: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (JPYbn) 2010 2011 2012E 2013E 2014EPrivate consumption 277,209 2.5 0.1 1.8 2.1 1.5Government consumption 93,863 2.2 2.0 1.4 1.3 1.1Gross fixed capital formation 97,914 0.2 0.9 3.6 1.7 1.2Stockbuilding* -5,314 0.7 -0.4 1.0 -0.1 -0.2Exports 59,754 24.5 -0.1 2.2 4.0 4.2Imports 58,094 11.2 6.3 6.7 5.2 5.0GDP 4.6 -0.7 2.5 1.6 1.1Nominal GDP (JPYbn) 471,060 481,857 468,343 487,077 498,279 508,245Unemployment rate, % 5.1 4.6 4.4 4.3 4.3Consumer prices, % y/y -0.7 -0.3 0.2 -0.1 -0.1Current account, % of GDP 3.6 2.0 2.1 2.5 2.4General government budget balance, % of GDP -9.0 -9.7 -9.9 -9.6 -9.0* Contribution to GDP growth (% points)23 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 23. ■ PolandSlowdown under control Economy losing momentum Fourth, Polish central bankers have ignored threats to economic growth until recently and they raised interest Fiscal consolidation likely to be put on hold rates in May. This controversial hike made the bank one Interest rate cuts just a question of time of a few central banks in the world fighting inflation in- stead of fighting for growth. The move has had an ad- PLN stronger amid yield hunting verse effect on investment and consumption decisions and magnifies the negative impact on lending activity ofSlowdown underway the tightening of regulations by the Polish FSA.Until the end of 2011 Poland seemed to defy economicgravity, with an acceleration in GDP growth in Q4 last Given the prolonged economic downturn in the Euro-year despite recessionary tendencies in the Euro area, area, stronger-than-expected tightening of domestic eco-which takes up over 50% of Polish exports. However, in nomic policy (not only fiscal consolidation, but also in-line with our view, the situation has changed early this terest rate hikes), we have revised down our GDP growthyear as all drivers of Polish growth shifted into lower forecasts for Poland. Now we predict that the country’sgear. economic growth rate could dip below 3% this year and slow down even further in 2013. Compared with its re-First, although with some lag, the Euro-area woes have gional peers and other parts of the EU, Poland would stillfinally started to bite. The weakening external demand outperform, but the slowing growth to below 2% y/yhas been gradually filtering through to the Polish econo- (and below 0% q/q sa) in some quarters will be a markedmy and a long-lasting drop in the inflow of new export change for the country, which was the only one in the EUorders negatively affects exports and industrial output. to avoid recession during the first wave of the crisis inThis time the PLN does not work as an external shock 2008-2009 and grew a robust 4.3% in 2011.absorber because it has shown an appreciation trend sincethe start of this year, contrary to sharp depreciation in Policy response?late 2008 and early 2009 when external demand also We think that the Polish authorities have some toolsslumped. available to avoid a deeper slowdown and to keep it un- der control. First of all, there is room for some monetarySecond, the fiscal consolidation that began in 2011 and policy action. Some central bankers have already sup-continued in 2012 has started to take its toll. Struggling ported officially submitted motions to trim rates in July,to escape from an excessive deficit procedure imposed by but they were a small minority (merely one MPC mem-the European Commission, the government sharply cut ber out of 10 supported the motion to cut rates by 50 bpspending, mainly public investment. This, coupled with and only two members voted for a cut of 25 bp). Hawksthe end of preparations for the UEFA Euro 2012, led to a raised rates only two months earlier and may not want tonotable weakening in activity in the construction sector. be seen performing a dramatic U-turn now. However, we believe that in early 2013 at the latest they will gain aThird, consumption growth is slackening amid a deterio- majority on the rate-setting panel. Winning support forration of labour market conditions and adjustments of earlier cuts could be problematic given the persistentlyhouseholds’ balance sheets. The latter largely involves a high inflation and new upside risks for the headline infla-need to rebuild savings (following a decline in the tion rate (tensions in the global food markets and withsavings ratio to historical lows) as there is no major food accounting for a large share of the Polish CPI bas-deleveraging pressure on households given that the ket). Positive monetary impulses may be strengthened byPolish private sector debt to GDP ratio is one of the a possible easing of regulations on bank lending.lowest in the EU.Poland: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (PLNbn) 2010 2011 2012E 2013E 2014EPrivate consumption 810 3.2 3.1 1.9 1.9 3.3Government consumption 249 4.1 -1.3 -0.1 0.0 2.0Gross fixed capital formation 285 -0.4 8.1 3.3 -1.9 4.5Exports 530 12.1 7.5 -3.4 1.9 7.5Imports 529 13.9 5.8 -5.5 -1.4 7.0GDP 3.9 4.3 2.8 2.3 3.1Nominal GDP (PLNbn) 1,344 1,416 1,525 1,625 1,691 1,781Registered unemployment rate, % 12.4 12.5 13.1 13.2 12.5Consumer prices, % y/y 2.6 4.3 3.9 2.7 2.2Current account, % of GDP -4.7 -4.3 -3.6 -3.0 -3.0General government budget balance, % of GDP -7.8 -5.1 -3.3 -3.3 -2.924 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 24. ■ PolandThere is some room to support the economy also on the Euro-area recession is taking its tollfiscal policy side. Government officials have recently an-nounced that fiscal consolidation would be continuedonly if it was not detrimental to economic growth. Weread this as an intention to revise previous ambitiousplans of fiscal deficit reduction to below 1% of GDP by2015 as it would be a step too far for the slowingeconomy. The presentation of a further reform drive inSeptember, announced by Prime Minister Donald Tuskbefore the summer holidays, will most likely besupplemented by an indication of measures aimed atstimulating economic activity. However, the room formanoeuvre in fiscal policy is constrained by EU deficitrules and domestic prudential limits on public debt.Moreover, any increase in the government’s investment All growth drivers into lower gearspending would not be very effective given the decreasedinflow of EU funds in 2013-2014 (before the new EUfinancial perspective for 2014-2020 is fully operationalfrom late 2014).Possible policy stimulus will be too little and too late toavoid a further slowdown during the remainder of 2012and the first half of 2013, but together with the recoveryin the Euro area it should be enough to make economicgrowth in Poland return to an upward trend. Economicgrowth beyond 2013 could moreover be fuelled by agradual start of large-scale investment in the energy sec-tor and positive supply side effects of the significant up-grade of the road infrastructure over the past few years. Ambitious fiscal targets likely to be revisedImproved credibilityWe estimate that Poland will manage to reduce the fiscalgap to 3-3.5% of GDP in 2012, which will be enough forthe European Commission to remove the excessive defi-cit procedure imposed on Poland and for rating agenciesto affirm Poland’s investment grade rating with stableoutlook. By keeping the deficit around 3% in 2013-2014the government should be able to maintain its restoredfiscal credibility. Also the external relations look favour-able with a moderate current account deficit likely to de-cline further amid weakening domestic demand. Withimproved credibility and no major economic imbalances,Poland has been attracting large foreign capital inflowsand become an alternative to such classical safe-havensas Germany where yields dropped below 0%. Elevated inflation delays monetary easingPLN stronger amid yield huntingAs long as the economic slowdown is under control andthe fiscal deficit remains in check, Poland will offer for-eign investors a combination of relatively strong funda-mentals and a yield pick-up. Therefore, we expect Polishbonds to keep attracting interest and the PLN to remainon an appreciation path. However, the record-high in-volvement of foreign investors in the domestic debt mar-ket is a significant risk factor for the PLN in the event ofa major deterioration of the country’s fundamentalsand/or a surge in global risk aversion.Piotr Bujakpiotr.bujak@nordea.com +48 22 521 36 5125 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 25. ■ Russia Inflation déjà vu Solid growth sustained, but softer H2 expected foreign direct investment, which will help the Russian industry to become more efficient. Russias exporters will Inflation acceleration will prompt CBR to act in H2 gain USD1.5-2bn a year from the removal of existing trading barriers. Lower tariffs on imported goods shouldThe Russian economy continued to expand by a lead to cheaper goods and boost consumers’ spendingrelatively fast pace of 4.4% during H1 supported by power.internal factors, but we will likely see a soft patch in Q3due to a lagged response to the slowdown in export The ongoing large government privatisation programmemarkets and expected weather-related losses in the is another vector of the Russian liberalisation policy. Theagricultural sector. Household consumption is still the USD 32bn privatisation plan in 2012-2014 and govern-major source of domestic growth. Supported by a healthy ment intention to sell controlling stakes in such backbonelabour market, consumer confidence is growing, companies as Sberbank, VTB and Aeroflot make us veryunemployment has fallen below 6%, supporting real optimistic about the effect of the reform. Privatisationwage growth, and household credit growth is expanding will continue to improve the country’s investmentabove 40% y/y; all factors that support household climate and attract more foreign funds.spending. Food prices a concern againThe key risk to growth comes from Europe, as more than Having reached historic lows, consumer prices did not50% of exports go to the EU. However, the negative stay there for long. As expected, consumer price inflationeffect for growth from export markets is partially offset bottomed out just below 4% y/y in late spring and pickedby the relatively low impact of net exports on GDP. up visibly over the summer. The favourable food price effects waned and postponed tariff hikes were introducedOpening up over the summer a few months after the elections.As was widely expected, Vladimir Putin won the presi-dential elections in March for a new 6-year term, and Mr Food prices are escalating particularly fast: having bot-Medvedev was appointed prime minister. The latest sur- tomed at 1.2% y/y in April, food price inflation hasveys confirm very high endorsement levels of Vladimir picked up to 5.5% y/y in July. The recent global foodPutin and Dmitry Medvedev. However, the threat of in- price increase on supply shortages, similar to the 2010creasing dissatisfaction of the middle class along with the food price spike, is a real risk for headline inflation foroil-oriented economy, force the current government to the rest of the year. The Russian CPI basket is heavilyimpose reforms in order to improve financial and busi- weighted in food prices (37,3%), which leaves headlineness infrastructure. The WTO entry (23 August) is one of inflation exposed to further global food prices increases.the positive triggers on the way. We expect inflation to accelerate further, with headlineRussia is now committed to bringing its laws and prac- inflation rising above 6% y/y as early as in August, but ittices into compliance with WTO rules. Russia’s com- will remain under 7% in coming months unless the RUBmitments include non-discriminatory treatment of im- depreciates and other food prices keep accelerating atports of goods and services, reduction of tariffs and previous months’ rates. In any case, we expect the centralbinding tariff levels, ensuring transparency when bank action and tighter liquidity to help keep inflationimplementing trade measures, limiting agriculture below 8% over the forecast horizon.subsidies, enforcing intellectual property rights of foreignholders of such rights and opening government Monetary policy to be kept tight in coming quartersprocurement contract opportunities to foreign firms. The Central Bank of Russia has kept its key rates un-Entering the WTO will make Russia more attractive to changed in the previous quarter, but the post-meetingRussia: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (RUBbn) 2010 2011 2012E 2013E 2014EPrivate consumption 21,203 3.0 6.0 6.2 6.4 6.5Government consumption 8,067 1.4 1.3 1.4 1.3 1.2Fixed investment 8,536 6.1 6.5 7.2 7.8 8.0Exports 10,992 7.1 3.5 3.8 5.5 6.5Imports 7,954 25.6 14.5 9.5 12.0 12.5GDP 4.0 4.4 4.2 4.8 5.0Nominal GDP (RUBbn) 38,807 45,300 47,293 49,280 51,645 54,227Unemployment rate, % 7.5 6.5 5.8 5.5 5.2Consumer prices, % y/y 6.9 8.5 6.3 6.8 7.0Current account, % of GDP 4.8 4.5 4.2 3.0 2.5Central govt budget balance, % of GDP -4.0 0.5 0.2 0.5 0.726 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 26. ■ Russiacommunication has shifted from very dovish to rather Record-low unemployment supports consumershawkish in recent months. It seems that the CBR paysmore attention to accelerating inflation rather than tosigns of slowing domestic growth momentum. The bankwill likely tolerate more sustainable credit and consump-tion growth rates going forward, and try to maintain in-flation close to its target of 6% for this year and towardsthe government’s 4-5% goal for the coming years.Now that inflation is accelerating and the risks are to theupside due to food prices, the CBR will not hesitate toact by hiking benchmark repo rates in H2 if inflation de-viates from target. In the meantime, the CBR will intro-duce effective policy tightening by preventing a rise ininterbank liquidity (by reducing provision via repo, less Inflation accelerating againFX intervention), which will keep money market rates athigh levels.RUB wants to break freeThe moves to more RUB flexibility continue. The Cen-tral Bank of Russia widened the RUB basket (55% USDand 45% EUR) floating corridor band by 1 RUB as of 24July to currently 31.65 – 38.65. The CBR has scaleddown its presence in the FX market significantly over thepast two years, which is part of its attempts to move to-wards an inflation-targeting regime.The widening of the RUB floating band was the fourthsuch move since 2010 towards the promised “free float”by 2014, and we expect similar steps by 6-month inter- The tightening cycle will continue in H2vals by the end of 2013. Allowing more RUB flexibilitygives more freedom to change rates without the CBRhaving to absorb the capital inflows (and increase inter-bank liquidity).With inflation increasing, the CBR will also be biasedtowards more RUB strength (each 1% in strength ofRUB effective exchange rate brings headline CPI downby 0.25%, if sustained), hence expect also “open mouth”operations each time the RUB weakening risks arise.A more flexible RUB will be more reactive to marketprices, which creates both strengthening opportunitiesand risks. We see a much stronger RUB, on average,based on our oil forecast of close to USD 120/bbl this CBR keeps widening RUB floating bandsyear (above the budget average of USD 100/bbl for thecoming years). We also see Russia being more attractivefor foreign investors, with sovereign debt/GDP barelyaround 10%. But the flipside of more RUB flexibility isthat any global factors will hit RUB, with episodes ofweakening along the way.Aurelija Augulytėaurelija.augulyte@nordea.com +45 3333 6437Dmitry Savchenkodmitry.savchenko@nordea.ru +7 495 777 34 77 419427 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 27. ■ EstoniaEconomy remains in a soft patchGrowth continued to moderate in the first half of 2012 in Manufacturing has stabilized, headwinds remaintandem with weaker prospects in key export markets.According to the flash estimate, growth slowed to 2.0%y/y in Q2 from 3.7% at the beginning of the year.Compared to Q1 GDP grew by a still decent 0.4% (sa).The modest export growth is attributable to weakerdemand for industrial goods in Europe and reducedenergy exports. Compared to Euro-area peers, Estonianmanufacturing performance has proven relativelyresilient to the ongoing debt crisis, with production downonly 1% y/y by mid-year. To some extent this reflects thebusiness sectors’ integration with stronger Nordiccountries as well as an ability to adjust to new economiccircumstances. Low investment demand and softconfidence in the Euro-area are likely to depress exports Corporate income and profits have largely recoveredin H2, but a gradual recovery is expected from springnext year.As expected, the economy has now entered a soft patch.Growth is driven by domestic demand, which is reflectedin higher contributions from the construction, trade andinformation and communication sectors. The increase inturnover and the favourable cost level continue to supportprofit growth and hence investment. Private investmentis largely driven by a need to expand business volumesand upgrade technologies and production. Two keyinvestment areas are machinery and equipment, andbuildings and structures. Investment demand is alsoreflected in the gradual pick-up of loan demand. Anotherbright spot for the economy is consumption and in Only slight moderation in retail sales expectedparticular retail sales as consumer confidence hasrecovered to its historical average. Stable labour marketsand moderate wage growth are likely to support retailsales, with only a slight moderation expected in H2.Overall, the recovery remains vulnerable to theresurgence of the sovereign debt crisis. The mainscenario is, however, a gradual pick-up in stronger exportmarkets such as the Nordics and Germany next year.Tönu Palmtonu.palm@nordea.com + 372 628 3345Annika Lindbladannika.lindblad@nordea.com + 358 9 165 59940Estonia: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (EUR bn) 2010 2011 2012E 2013E 2014EPrivate consumption 7.41 -1.7 4.2 3.8 3.4 3.7Government consumption 3.05 -1.1 1.6 2.0 0.9 1.2Fixed investment 2.97 -9.1 26.8 10.0 6.5 7.0Exports 8.96 22.5 24.9 3.7 6.5 6.5Imports 8.15 20.6 27.0 6.5 6.8 6.6GDP 2.3 7.6 2.3 3.5 3.8Nominal GDP (EURbn) 13.84 14.3 16.0 16.9 18.0 19.2Unemployment rate, % 16.9 12.5 10.8 9.9 8.9Consumer prices, % y/y 3.0 5.0 3.7 3.0 2.9Current account, % of GDP 3.8 2.1 -2.3 -1.5 -1.328 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 28. ■ LatviaEconomy keeps delivering positive surprisesThe economy keeps delivering positive surprises for the GDP still on a steady upward trendsecond consecutive year. After a 6.9% y/y expansion inQ1 2012, the preliminary GDP estimate for Q2 showedan increase of 5.1%. Quarterly growth was estimated at1.0% (sa), unchanged from Q1. Export demand appearsto have been an important driver of growth as theindustrial volume index grew by 1.8% q/q and the valueof exports kept increasing. Fixed investment has likelybeen driving domestic demand, while retail salesstagnated compared to Q1. While we expect growth toslow in H2 as a result of the Euro-area debt crisisweighing on demand in main export markets andstatistical base effects, we have increased our growthforecast for 2012 to 4.2%. Latvian exports gaining market sharePublic finances are sound. The budget deficit is likely toremain below 3% of GDP even after the VAT base ratecut from 22% to 21% in July, while net public debt isslightly above 30% of GDP. The state treasury’s totaldeposits with the Bank of Latvia exceed EUR 1.6bn orabout 8% of GDP, which is enough to cover the budgetdeficit and meet other obligations throughout 2012 and2013. However, the first signs of external imbalances areappearing. Although this is still not worrying, the currentaccount deficit is estimated to be just below 3% of GDPin H1 2012. The reduction of indirect taxes is moreoverlikely to slightly boost imports in H2.Inflation is slowing largely due to the VAT cut.Lowering the VAT can be interpreted as a signal that the Inflation slowing, but above the criteriongovernment is serious about adopting the euro in 2014.Especially the inflation criterion is subject to many risksbeyond the government’s control, including global foodprices. The 12M average inflation rate in Latvia is stillslightly above the 3% currently required. The inflationcriterion currently includes for example Greece whereinflation is slowing, which is likely to push the criterionlower. At the same time an increase in food prices wouldhave a significant impact on inflation in Latvia as theweight of food in the consumption basket is among thehighest in the EU.Andris Strazdsandris.strazds@nordea.com + 371 6 7096 096Latvia: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (LVLmn) 2010 2011 2012E 2013E 2014EPrivate consumption 8,026 0.4 4.4 3.5 2.6 3.8Government consumption 2,557 -9.7 1.3 0.5 1.0 1.0Fixed investment 2,820 -12.2 24.6 15.2 4.5 7.8Exports 5,742 11.5 12.6 6.2 4.0 6.3Imports 5,935 11.5 20.7 6.3 4.5 6.8GDP -0.3 5.5 4.2 2.5 3.9Nominal GDP (LVLmn) 13,070 12,739 14,161 15,080 15,830 16,890Unemployment rate, % 18.7 16.2 15.7 14.5 12.8Consumer prices, % y/y -1.1 4.4 2.3 2.5 2.8Current account, % of GDP 3.0 -1.2 -3.2 -3.5 -3.629 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 29. ■ LithuaniaShowing resilienceThe Lithuanian economy remains resilient to the on- Resilience of retail trade and industrial productiongoing European sovereign debt crisis and continues togrow albeit at a slower pace than in 2011. Annualeconomic growth slowed to 3.9% in Q1 2012 and furtherto 2.1% in Q2 2012, but is forecasted to remain positive,averaging 2.7% and 3.3% in 2012 and 2013, respectively.Weaker-than-anticipated growth in Q2 2012 was aboveall the result of a temporary shutdown of the OrlenLiLetuva refinery (from end-April to mid-June) thataccounts for close to 30% of all industrial production inLithuania. Consequently, industrial productioncontracted by 2.8% in Q2 2012 whereas excluding theproduction of refined petroleum products, industrialproduction continued to grow at a robust 6.2% y/y. Meeting Maastricht inflation criterion is a big “if”After the temporary slowdown in April, retail tradegrowth accelerated to 4.9% y/y in June with growth ofnon-food items increasing to 12.1% y/y. Stablehousehold sentiment suggests that retail trade growthshould remain in positive territory in coming months. Asa result, private consumption will continue to play aleading role in Lithuanian economic growth.Inflationary pressures eased in Q2 2012, but averageannual inflation still stood at 3.6% in July – well abovethe Maastricht convergence criterion of approximately3.0%. Even though inflation is expected to moderate to3.0% by the end of 2012, there is still a high probabilitythat Lithuania will not be able to meet the Maastricht Budget deficit declining in line with expectationsinflation criterion in early 2013.The budget deficit is gradually declining and is expectedto fall below 3% of GDP in 2012. Nonetheless, in case ofa more severe recession in the Euro zone, there is a riskthat the deficit will exceed the 3% mark and thus fail tomeet the euro convergence criteria. Overall, we see euroadoption in 2014 as an unlikely scenario at the moment.Žygimantas Mauricaszygimantas.mauricas@nordea.com + 370 5 2657 198Lithuania: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (LTLmn) 2010 2011 2012E 2013E 2014EPrivate consumption 63,497 -4.9 6.1 3.5 3.2 3.3Government consumption 20,180 -3.3 0.2 0.7 1.8 2.0Fixed investment 15,808 1.0 17.1 4.7 7.0 7.2Exports 50,000 17.4 13.7 3.0 6.5 6.5Imports 51,372 17.3 12.7 3.8 6.9 6.8GDP 1.4 5.9 2.7 3.3 3.5Nominal GDP (LVLmn) 91,913 95,074 106,019 112,100 118,800 126,500Unemployment rate, % 17.8 15.4 14.0 12.8 11.5Consumer prices, % y/y 1.3 4.1 3.0 2.8 3.0Current account, % of GDP 1.1 -1.6 -2.7 -3.0 -3.0General govt budget balance, % of GDP -7.2 -5.5 -2.7 -3.0 -3.030 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 30. ■ ChinaStability, stability and … stability another rate cut before the end of Q3. Credit demand has Stabilising growth is once again top priority fallen according to People’s Bank of China’s quarterly Leadership change in the spotlight survey of bankers, so monetary tools may prove to be less effective now. Thus, the central bank will remain A close eye on local government stimulus plans cautious in fear of increasing inflationary pressure and CNY volatility persists misleading the markets regarding real estate controls.Growth target is not imperilled Princelings to rule the countryThe government-induced slowdown in China as a part of The fifth generation of leaders since the establishment ofthe transition towards a sustainable consumption-driven the People’s Republic of China will take over power ineconomy ran into stronger-than-anticipated headwinds in the autumn of 2012, when the 18th National Party’s Con-the first half of 2012. The uncertain outlook has gress is set to take place in Beijing. The Politburo Stand-prompted the authorities to make stable growth on top ing Committee, the most powerful decision-making bodypriority. The latest monetary and fiscal stimulus in China, will replace all but two of its nine members. Ameasures will support growth in the second half of this handful of senior officials are seen as the likely candi-year. dates to join the prestigious and secretive group. Most of them come from prominent families within the Com-In the near term, China’s economy remains vulnerable to munist Party, the so-called “Princelings”. They are betterexternal risks. According to Commerce Minister Chen educated and more internationally-oriented than theirDeming, China may risk not achieving 10% export predecessors. We believe the event will go smoothly, asgrowth this year. Despite emphasis from Beijing, private the internal power struggles are probably resolved duringconsumption has not taken the lead in driving growth. the top official meeting in Beidaihe in early August. WeWhile we expect it to take a bigger role in future, this do not expect any major reforms to be launched in thewill not happen anytime soon. Looking forward, China near future after the shift of power, since stability is val-will continue relying on investments, the remaining ued over change.growth engine, to ensure a steady growth rate. Weestimate GDP to grow by 8-8.5% in our forecast period Not only will the top leadership be replaced, but in the2012, 2013 and 2014. country’s 31 provinces and province-level municipalities, 361 cities, 2,811 counties and 34,171 townships, millionsFalling inflation makes room for monetary easing of party members are also in the middle of being reshuf-Inflation has decreased as expected due to moderating fled. Regional GDP has traditionally been a measure tomeat prices and basis effects. Full-year inflation will be evaluate their performance, so in the upcoming monthscomfortably below the government’s target of 4%. The we will see intensified local emphasis on boostingrecord-high global grain prices are likely to have little growth, mainly through investments.impact on Chinese inflation. China is self-sufficient in Property market – a balancing actcorn and wheat and it had a robust harvest this year. Thebiggest impact on Chinas food inflation will be rising China’s property market was once dubbed the “most im-soybean prices, since 80% of the domestic consumption portant sector in the entire global economy”. It remains ais imported. However, based on experience from 2008, big fear hanging over the policy makers. The challenge isthe effect will not be significant. to balance between on the one hand bringing down house prices and increasing housing affordability and on theWith the low inflation and uncertain growth outlook, the other hand preventing the cooling property sector’spolitical stand has shifted from balancing growth and in- negative spill-over on the domestic economy. The latestflation towards emphasising growth. We expect to see modest rebound in house prices could be a result of theChina: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (CNYbn) 2010 2011 2012E 2013E 2014EPrivate consumption 12,113 9.1 5.8 9.0 9.1 10.0Government consumption 4,569 9.0 12.9 8.9 8.8 9.0Fixed investment 15,668 22.5 11.4 8.5 9.2 9.0Stockbuilding* 778 0.5 0.2 -0.4 0.0 0.1Exports 9,106 -10.3 28.4 8.5 8.5 9.1Imports 7,603 4.1 20.1 8.6 10.0 11.0GDP 9.2 10.5 8.0 8.3 8.5Nominal GDP (CNYbn) 34,632 39,431 45,590 50,655 56,986 64,394Unemployment rate, % 4.1 4.1 4.1 4.1 4.1Consumer prices, % y/y 3.3 5.4 3.1 4.0 3.8Current account, % of GDP 5.1 2.8 2.5 2.2 1.5General government budget balance, % of GDP -1.7 -1.1 -1.5 -2.3 -1.9* Contribution to GDP growth (% points)31 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 31. ■ Chinapolicies to encourage real housing demand, but it may A steady GDP growth is desiredalso reflect a misreading of central government policy.Evidence suggests that some local governments haveeased property restrictions surreptitiously regardingmultiple housing purchases, hoping to reviveconstruction jobs and land sales. We believe the centralgovernment will maintain its favourable policies for first-time home buyers, while continuing to rein in speculativedemand and tighten control of local implementations.Local officials should be kept on a tight leashThe only economic anxiety to rival the housing market isthe local government’s investment plans which shouldnot be neglected. After recognizing that the 4trn yuanpackage in 2008 was a mistake that left the country with Property prices show signs of mild recoverystubborn inflation, messy local-government finances andskewed investments, the Politburo has rejected that its2012 stimulus efforts might entail the same loss of disci-pline as in 2008. However, this view is not shared by thelocal authorities, which have all developed their ownambitious plans. The most remarkable case is the Gui-zhou province’s 3trn yuan investment on culture andtourism, which is more than five times its 2011 GDP.Even though not all projects will be approved by the cen-tral administration, the local authorities have their waysto circumvent the rules.These projects will be financed through local governmentfinancing vehicles which have already accumulated hugeoff-balance-sheet debt. Several unofficial sources have Most investment funding through financial vehiclesgiven their estimates on the size of the total local debt,ranging from 50% to more than 100% of GDP (27% byofficial auditors). The high indebtedness raises concern,as the profitability of these projects and their ability toservice the debt is doubtful. Numerous infrastructureprojects have been found in poor quality without theability to withstand bad weather conditions. Agovernment study showed 30% of the 4trn investmentsfrom 2008 have failed. In addition, the local investmentplans are more likely to cause inefficient resourceallocation and overcapacity than if it was managed fromthe central.CNY to continue its two-way volatilityThe intensified slowdown in China has had a spill-over Continued CNY volatility aheadon the CNY which has weakened remarkably against theUSD since May. Premier Wen Jiaobao has reiterated thatthe CNY is near its fair value and that a liberalised cur-rency is not necessary a stronger currency. With theshrinking current account deficit and sluggish economicoutlook, the top officials have an incentive to let theCNY continue its weakening course in the short term. Inthe longer term, we expect the CNY appreciation to con-tinue, mainly because of the strong underlying growth inChina. The appreciation of the CNY is by no means over,although we see a slower and more volatile trend ahead.Amy Yuan ZhuangAmy.yuan.zhuang@nordea.com +45 3333 560732 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 32. ■ IndiaA drought of growthEconomic activity in India began decelerating in late Weak domestic economy weighed on growth2011 and the conditions have only deteriorated during thefirst eight months in 2012, hampered by both domesticand global factors. External demand has weakenedfollowing the slowdown in developed countries andChina. The domestic economy is severely hit by the poormonsoon (20% below normal) that led to fallingagricultural production and dropping rural incomes.Despite falling over several months, WPI inflation,India’s key inflation measure, still has not moved closerto the central bank’s comfort level of 5%. The below-normal rainfall this year will hurt the crop output as 60%of the production is rain-fed. The resulting higher foodprices and elevated fuel prices will keep inflation above WPI inflation kept above the comfort levelthe 5% mark in the short term. Consequently, theReserve Bank of India is unable to utilise its monetarytools to support the downward-trending economy. Thus,as inflation remains a major concern we expect thecentral bank to leave the repo rate unchanged at 8% thisyear. The stubbornly high inflation also erodeshouseholds’ purchasing power and dampens privateconsumption.The slowdown in India is not only cyclical but alsostructural. The unhealthy public finances of the countryprevent fiscal policy from being eased to boost growth.In fact, the weaker INR from the beginning of the yearhas further increased the fuel subsidy bill and hencepublic expenditure, as import prices have surged. Deficit Public finances to deteriorate additionallyand debt as a percentage of GDP are approaching thelevels seen in southern Europe. Standard & Poors andFitch already cut their outlook for India to negative. Withparliamentary election scheduled for 2014 and the weakposition of the current government, it seems likely that itwill maintain stability at the expense of reforms in retailindustries and a reduction of fuel subsidies.Regardless of the recent decline in the economy, wecontinue to take a positive view on India’s long-termgrowth. This is primarily based on the favourabledemographics and large pool of available labour.Amy Yuan ZhuangAmy.yuan.zhuang@nordea.com +45 3333 5607India: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (INRbn) 2010 2011 2012E 2013E 2014EPrivate consumption 37,081 8.1 5.5 5.5 6.5 8.0Government consumption 7,743 7.8 5.1 5.2 6.0 5.5Fixed investment 20,418 -16.8 5.5 5.5 8.0 9.8Exports 13,000 15.6 18.5 9.5 12.0 16.0Imports 16,469 9.6 9.5 12.0 13.0 15.0GDP 9.6 6.9 6.0 6.7 7.2Nominal GDP (INRbn) 64,574 76,741 88,558 100,071 113,080 128,911Wholesale prices, % y/y 9.6 9.5 7.5 6.8 7.0Current account, % of GDP -3.3 -2.8 -4.0 -3.0 -2.2General government budget balance, % of GDP -3.6 -6.6 -7.0 -7.5 -8.033 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 33. ■ BrazilSlow BRIC healingThe economy has disappointed in the first half of this Growth stabilisingyear with industrial production again dragging downgrowth. It seems, however, that the worst is behind usand even though manufacturing indices are still reflectingcontraction, recent activity and business confidencereadings show improvement. The government announceda number of supply-side initiatives to support industry,including an increase in public infrastructure spendingand concessions to the private sector as well as lowerenergy and payroll tariffs. Private sector demand remainssupported by a continuous decline in unemployment, andretail sales have rebounded strongly over the past fewmonths helped also by a reduction in credit rates andtaxes. This supports our expectation that GDP growthwill move back above 4% y/y by Q4 this year. Policy easing cycle nearing the endThe central bank of Brazil continued its aggressivemonetary policy easing this year, cutting the benchmarkSELIC rate from the peak of 12.5% last year to 8.00%currently. With signs of improved economic momentumand more optimistic policymakers, we believe the easingcycle has ended, with the risk tilted towards just onemore rate cut. After having approached the central bank’starget (4.5%) earlier this year, inflation has begun toaccelerate again. This trend will likely continue andeventually force policymakers to start tightening in late2013.The Brazilian central bank chose to tolerate further BRLweakness early this year, allowing the USD/BRL to More balanced capital inflowsweaken to the 2.00 level which the markets haveperceived as the bank’s comfort zone (judging fromintervention patterns). We expect gradual BRLstrengthening going forward, supported by commodityprices and the end to the policy easing cycle. Notably,policymakers have achieved a rebalancing of capitalinflows because over the past years as portfolio inflowshave declined, the more stable foreign direct investmentflows have grown. This should help prevent disorderlyBRL moves when global capital flows shift.Aurelija Augulytėaurelija.augulyte@nordea.com +45 3333 6437Brazil: Macroeconomic indicators (% annual real changes unless otherwise noted) 2009 (BRLbn) 2010 2011 2012E 2013E 2014EPrivate consumption 1,979.8 7.0 4.5 4.3 4.8 5.5Government consumption 687.0 4.0 3.0 3.2 3.0 3.0Gross fixed capital formation 585.3 22.0 6.0 3.0 6.5 7.4Exports 355.7 11.5 8.5 6.6 7.0 8.0Imports 360.8 36.3 12.8 6.9 7.2 9.0GDP 7.6 2.8 2.6 4.6 4.8Nominal GDP (BRLbn) 3,239.4 3,721.5 3,825.7 3,925.2 4,105.7 4,302.8Unemployment rate, % 6.7 6.0 5.7 5.6 5.7Consumer prices, % y/y 5.0 6.4 5.2 5.4 5.8Current account, % of GDP -2.3 -2.1 -2.5 -2.7 -2.8General government budget balance, % of GDP -2.7 -2.4 -2.0 -2.1 -2.234 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 34. ■ OilOil prices stay high but spare capacity buffer should buildOil prices are expected to remain high over the forecast Oil price forecasts Brent – baseline (USD/barrel)period as the market will remain tight by historical Q1 Q2 Q3 Q4 Yearstandards. Supply additions are expected to outpace 2011 106 115 112 110 111demand growth resulting in slightly softer oil balances in 2012E 118 109 112 109 1122013. The market will remain similarly tight in 2014 as 2013E 108 110 112 114 111supply growth slows and demand accelerates with the 2014E 114 114 116 116 115 Source: Nordea Marketsglobal economy. Oil prices will likely remain volatilearound high levels given the market tightness and risks to Supply growth to outpace demand growthsupply.Income growth, economic activity and population growthare vital drivers of oil demand. Global oil demand isexpected to increase at a higher pace in 2013-14 than inthe prior two years as economic growth picks up. OECDdemand will continue to decline owing to efficiencygains, fuel switching and subdued economic growth.Non-OECD countries contribute to all oil demandgrowth, which averages 1.1mb/d over 2013-14.Structurally higher economic growth, rising income andpopulation growth in emerging economies is expected tooutweigh efficiency gains in oil use and switch to otherenergy sources. Demand for transportation is expected toremain the primary driver of global oil use, accounting OPEC spare capacity to increase from low levelsfor around 52% of total oil demand.Global oil supply is expected to grow in the forecastperiod mainly driven by a healthy expansion of oilproduction capacity in North America, Iraq, Brazil andOPEC NGLs. Non-OPEC is expected to account for thelion’s share of new capacity brought online. We expectthe past few years’ impressive growth in US shaleoil/tight oil and Canadian oil sands production tocontinue, although infrastructure and environmentalissues may restrain future advances. In Brazil localcontent requirements and cost inflations could continueto challenge the country’s expansion plans. We onlyforesee a slight resumption of the oil production in Oil price baseline, high and low risk scenariosLibya, Yemen and Sudan/South Sudan in the forecastperiod after political unrest has cut oil production in totalby around 1 mb/d. OPEC capacity is expected to increasein the forecast period. Capacity expansions in Iraq,Angola, United Arab Emirates and the return of Libyanoil are expected to outmatch the natural production/sanctions related declines in Iran and smaller declines inNigeria and Venezuela. How long Iran could stand theEU/US imposed sanctions is uncertain. We expectproduction to gradually resume in late 2013, but thepolitical situation could take a twist for the better orworse before/after this time. Political unrest andunplanned production outages are expected to leaveglobal oil supply at risk.Bjørnar Tonhaugenbjornar.tonhaugen@nordea.com +47 2248 7959Thina M. Saltvedtthina.margrethe.saltvedt@nordea.com +47 2248 799335 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 35. ■ MetalsMetal prices scratching the bottom for nowBase metals prices have trended lower since March as the Base metal price forecasts (USD per tonne)economic slowdown gathered pace driven by Euro-zone 2012E 2013E 2014Ewoes. China’s demand for metals has slowed, but a Aluminium 1,967 2,225 2,450gradual pick-up in the country that consumes 40% of the Copper 7,865 8,025 7,950 Nickel 17,463 18,625 19,750world’s industrial metals output is expected already in Zinc 1,926 2,100 2,300the latter part of this year as infrastructure projects are Source: Nordea Marketsfast-tracked to support growth. Long-term prospects formetals demand are robust despite the current slowdown, Base metals pricesleaving pressure on supply to continue expanding. Metalsmarkets are expected to tighten gradually and prices torise from the current low levels compared to costs.Aluminium producers are experiencing the second-worstyear since 1982 as low prices have persisted longer thanexpected. The current situation is unsustainable in themedium term and further capacity cuts are expected.Demand outside Europe and Japan is expected to growrobustly as aluminium continues to win market share dueto its flexible uses and cost-competitiveness. The projectpipeline in the World ex China is practically dry beyond2013, while Chinese capacity expands strongly. Lowprices will persist for longer than previously expected Copper and aluminium forecastbefore they realign with industry costs at higher levels.Copper supply is improving and the outlook for supplyover the forecast period looks better than in a long time.Demand is expected to recover over the forecast period,led by China, and keep pressure on copper suppliers todeliver according to plans. An increasing share of coppersupply will come from new projects (greenfields)especially in 2014, leaving the likelihood for disruptionshigh. Copper prices are expected to remain high andfirmly above the long-term incentive price of USD 6,500per tonne, thus underpinning greenfield projects.Nickel prices continue to underperform on expectationsof steady supply additions. The market is expected to Nickel and zinc forecastremain in surplus over the forecast period, leading toinventory build-ups despite a gradual recovery indemand. Supply from the new generation of nickelproduction (HPAL) has been mixed, but is expected tocontribute to a larger share of total supply, but with risksof delays and technical setbacks. Nickel prices areexpected to increase from current levels which areconsidered too low compared to production costs in thelong run.The zinc market will remain in surplus in the first part ofthe forecast period, but a gradual tightening of the marketis expected to commence in 2014 as a number of oldmines approach the end of their life. The currentlydepressed zinc prices are expected to recover graduallybefore higher prices are required to balance supply anddemand in the latter part of the forecast horizon.Bjørnar Tonhaugenbjornar.tonhaugen@nordea.com +47 2248 795936 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 36. ■ Alternative scenario 1Back on trackWith plenty of negative headlines and few signs of the Scenario forecastGreat Recession loosening its grip, it is easy to succumb 2011 2012E 2013E 2014E World GDP growth % 3.8 3.2 4.1 4.9to gloom and doom. Sometimes though, the darkest hour - USA 1.8 2.2 2.8 3.4is just before the dawn. In this scenario we try to - Euro-zone 1.5 -0.6 1.2 2.7highlight a few events which could help create a growth - China 10.5 8.2 8.6 9.0surprise. Global Inflation (CPI) % 4.1 2.6 3.1 2.9 - US 3.1 2.3 2.8 1.9The German Constitutional Court rules that the ESM is - Euro-zone 2.7 2.4 2.8 3.1 - China 5.4 3.1 3.8 4.0not in violation of German law and at the same time Unemployment %European officials fast-track the creation of the common - US 9.0 8.1 7.3 6.4banking supervisor, which comes into action before the - Euro-zone 10.2 11.4 11.7 11.0end of the year. The ESM comes into action and - China 4.1 4.1 4.0 3.9immediately starts to replenish bank capital directly and Budget deficits %to buy bond issuances of peripheral Euro-zone countries. - US -8.6 -6.0 -4.2 -3.5 - Euro-zone -4.1 -3.5 -2.1 -0.9 - China -1.1 -2.6 -2.2 -2.2 In the US, the fiscal cliff is avoided as a political Financial indicators solution is found that prolongs the current tax cuts - US 3M LIBOR 0.34 0.45 0.85 2.25 for everybody, military spending and entitlements - US 10Y Treasury 2.79 1.80 2.70 3.90 are cut slightly and work on medium-term balancing - EZ 3M Euribor 1.39 0.66 0.50 1.60 of US finances resume. - DE 10Y Bund 2.65 1.55 1.85 2.60 - EUR/USD Chinese officials loosen fiscal policy, economic 1.30 1.22 1.10 1.00 - Brent Oil 111 107 125 125 growth comes slowly back to life in Europe and China continues its push to grow domestic demand by expanding health insurance and lowering interest rates. Growth moves above 8% again. Massive pressure from the US, the G20 and the IMF convinces European politicians that focus needs to be on balancing structural budgets over the medium term, allowing fewer tax hikes and few or no cuts in government spending. With the negative feedback loop between banks and sovereigns in Europe finally broken, businesses and consumer confidence gets a big boost and business finally dare to invest again. Consumers loosen their purse strings slightly. Oil demand increases but continued exploration after shale oil keeps oil prices from moving too high.Much of the current slowdown can be attributed to thenegative feedback loop from shaky government finances,worries about the survival of the Euro zone – and simplyfear of what the future has in store.If governments can finally convince investors andconsumers that they are on top of the situation in Europe,investors might offer governments a bit more time toallow policies to work, interest rates in peripherals willcome down, worries about sovereign defaults willsubside, businesses will start to invest again andconsumers will be willing to increase consumption. Anormal recovery will start to unfold with an extra boostfrom low interest rates and pent-up demand.Steen V. Grøndahl, CFAsteen.grondahl@nordea.com +45 3333 145337 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 37. ■ Alternative scenario 2That sinking feelingAs European leaders return from their holidays, they are Scenario forecastonce more forced to deal with a deteriorating economic 2011 2012E 2013E 2014E World GDP growth % 3.8 2.8 1.6 3.1outlook. The situation in Southern Europe is dire but - USA 1.8 1.9 0.8 2.7many other developed economies are holding up - Euro-zone 1.5 -0.7 -2.0 0.0reasonably well. That might change. In this scenario we - China 10.5 7.4 6.2 6.7try to list a few things that can sink growth further. Global Inflation (CPI) % 4.1 2.5 1.6 1.4 Northern European countries are sticking to the - US 3.1 2.0 1.0 1.2 - Euro-zone 2.7 2.5 2.1 1.2 Merkel doctrine of hard austerity. At the same time, - China 5.4 3.2 1.7 1.8 voters send clear signals not to allow any more Unemployment % bailouts. - US 9.0 8.4 9.2 8.7 ECB is unable to intervene in European bond - Euro-zone 10.2 11.4 12.1 12.0 markets due to stiff opposition from the Bundesbank - China 4.1 4.3 5.0 5.6 and likeminded central banks. Their only option is to Budget deficits % - US -8.6 -7.2 -6.5 -6.0 cut rates to zero, do more LTRO and loosen - Euro-zone -4.1 -3.6 -2.8 -2.6 collateral demands, but that is about it. - China -1.1 -2.8 -3.1 -3.2 With continued turmoil in Europe and worries about Financial indicators the fiscal situation in the US, companies freeze on - US 3M LIBOR 0.34 0.40 0.40 0.60 investments and hirings. The uncertainty and the - US 10Y Treasury 2.79 1.70 1.20 1.60 beginning job losses feed directly into private - EZ 3M Euribor 1.39 0.60 0.25 0.25 consumption and house prices take another dive - DE 10Y Bund 2.65 1.50 0.90 1.20 - EUR/USD 1.30 1.22 1.18 1.18 exaggerating the drop in consumption. - Brent Oil 111 111 82 92 Oil prices drop below USD 80 a barrel (but averages USD 80 a barrel for the year) which supports disposable income growth especially in the US. With major export markets slowing, the Chinese economy slows during the first half of the year but more rate cuts from PBoC as well as directed investments from the Chinese government provides a gentle lift to Chinese economy in the second half of the year. Flight to safety is in effect with investors fleeing to the Nordics, Germany, the US and the UK (and selected other countries). Spreads on peripherals widen further and yield on Spanish and Italian bonds top 8%.In our downside risk scenario, World GDP is expected toincrease by 1.5%. This might seem high but bear in mindthat from 1982 to 2007, World growth averaged 3.5% –but also that GDP dropped 0.6% in 2009.An added cause for worry is that much of the fiscalfirepower has been spent in the aftermath of the financialcrisis, making it more difficult to arrest the developmentshould growth take a turn for the worse.Steen V. Grøndahl, CFAsteen.grondahl@nordea.com +45 3333 145338 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 38. ■ Economic Research NordeaEconomic Research Nordea Denmark: Sweden: Annika Winsth, Chief Economist Sweden Helge J. Pedersen, Global Chief Economist annika.winsth@nordea.com, tel. +46 8 614 8608 helge.pedersen@nordea.com, tel. +45 3333 3126 Torbjörn Isaksson, Chief Analyst Johnny Bo Jakobsen, Chief Analyst torbjorn.isaksson@nordea.com, tel. +46 8 614 8859 johnny.jakobsen@nordea.com, tel. +45 3333 6178 Andreas Jonsson, Senior Analyst Anders Svendsen, Chief Analyst andreas.w.jonsson@nordea.com, +46 8 534 910 88 anders.svendsen@nordea.com, tel. +45 3333 3951 Bengt Roström, Senior Analyst Jan Størup Nielsen, Senior Analyst bengt.rostrom@nordea.com, tel. +46 8 614 8378 jan.storup.nielsen@nordea.com, tel. +45 3333 3171 Linus Lauri, Assistant Analyst Amy Yuan Zhuang, Senior Analyst linus.lauri@nordea.com, tel. +46 8 614 80 03 amy.yuan.zhuang@nordea.com, tel. +45 3333 5607 Siri Pettersson, Assistant Analyst Aurelija Augulyte, Analyst siti.pettersson@nordea.com, tel. +46 8 614 80 03 aurelija.augulyte@nordea.com, tel. +45 3333 6437 Georg von Wowern, Assistant Analyst Estonia: georg.von.wowern@nordea.com, tel. +45 3333 6102 Tönu Palm, Chief Analyst tonu.palm@nordea.com, tel. +372 628 3345 Henrik Lorin Rasmussen, Assistant Analyst henrik.l.rasmussen@nordea.com, tel. +45 3333 4007 Latvia: Daniel Freyr Gustrafsson, Assistant Analyst Andris Strazds, Senior Analyst daniel.freyr.gustafsson@nordea.com, tel. +45 3333 5115 andris.strazds@nordea.com, tel. +371 67 096 096 Lithuania: Finland: Zygimantas Mauricas, Analyst Roger Wessman, Chief Economist Finland zygimantas.mauricas@nordea.com, +370 5 2657 198 roger.wessman@nordea.com, tel. +358 9 165 59930 Pasi Sorjonen, Senior Analyst Russia: pasi.sorjonen@nordea.com, tel. +358 9 1655 9942 Dmitry A. Savchenko, Analyst dmitry.savchenko@nordea.ru, +7 495 777 34 77 4194 Annika Lindblad, Analyst annika.lindblad@nordea.com, tel. +358 9 1655 9940 Dmitry S. Fedenkov, Analyst dmitry.fedenkov@nordea.ru, +7 495 777 34 77 3368 Norway: Poland: Steinar Juel, Chief Economist Norway Piotr Bujak, Chief Economist Poland steinar.juel@nordea.com, tel. +47 2248 6130 piotr.bujak@nordea.com, +48 22 521 36 51 Erik Bruce, Chief Analyst erik.bruce@nordea.com, tel. +47 2248 4449 Thina M. Saltvedt, Senior Analyst thina.margrethe.saltvedt@nordea.com, tel. +47 2248 7993 Katrine Godding Boye, Senior Analyst katrine.godding.boye@nordea.com, tel. +47 2248 7977 Bjørnar Tonhaugen, Senior Analyst bjornar.tonhaugen@nordea.com, tel. +47 2248 7959 Michael H. Cook, Assistan Analyst Michael.hurum.cook@nordea.com39 ØKONOMISK OVERSIKT │SEPTEMBER 2012 NORDEA MARKETS
  • 39. ■ Economic Research NordeaNordea Markets is the name of the Markets departments of Nordea Bank Norge ASA, Nordea Bank AB (publ), Nordea Bank Finland Plc and Nordea Bank Danmark A/S.The information provided herein is intended for background information only and for the sole use of the intended recipient. The views and other information provided herein are thecurrent views of Nordea Markets as of the date of this document and are subject to change without notice. This notice is not an exhaustive description of the described product or therisks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient.The information provided herein is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or saleof any financial instrument. The information contained herein has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient.Relevant and specific professional advice should always be obtained before making any investment or credit decision. It is important to note that past performance is not indicative offuture results.Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction.This document may not be reproduced, distributed or published for any purpose withoutthe prior written consent from Nordea Markets.Nordea, Markets DivisionNordea Bank Norge ASA Nordea AB (publ) Nordea Bank Finland Plc Nordea Bank Danmark A/S17 Middelthuns gt. 10 Hamngatan Aleksis Kiven katu 9, Helsinki 3 StrandgadePO Box 1166 Sentrum SE-105 71 Stockholm FIN-00020 Nordea PO Box 850N-0107 Oslo +46 8 614 7000 +358 9 1651 DK-0900 Copenhagen C+47 2248 5000 +45 3333 3333