While many western countries are still reeling from the widening economic crisis and some southern European economies are regarded as basket cases, Scandinavia has been weathering the global financial storm surprisingly well.
The facts
Norway Underpinned by high oil prices and exports of related equipment and services, Norway's problems are those of success. Growth is predicted to be high, but increased labour immigration will reduce the risk of costs rising sharply and the economy overheating. It is predicted that wage growth will be much higher than in neighbouring countries, but not so high as to push inflation above target. However, strong economic growth could mean higher interest rates over the next couple of years.
Sweden Despite a weakening labour and export market since the global financial crisis, Sweden's economy is proving to be remarkably resilient. The country's GDP and employment rose again during the first half of this year. Nevertheless, the global economic situation has forced the Swedish finance minister Anders Borg to reduce the country's growth targets.
Denmark Although Denmark's economy has been languishing when compared with Norway and Sweden, activity has remained at about the same level since the autumn of 2010. But it is widely expected that the economy will gradually start to grow again this year, accelerating to 2.1 per cent in 2014. The expected reversal of economic trends will be driven by growing consumer spending.
Finland With its economy no longer propelled by mobile phone maker Nokia, which once accounted for half the value of the Helsinki stock exchange, Finland faces difficulties typified by a slowdown in consumer spending, a growing public sector deficit and an export market that is not expected to start to recover until next year. Nordea has lowered its forecast for economic growth next year from 1.6 per cent to 1.2 per cent. In 2014, growth is expected to be 2.8 per cent.
The fact that
Scandinavian countries have onerous tax systems and generous state welfare benefits seems to contradict accepted economic wisdom in other parts of the world, such as in the United States and the United Kingdom, where the role of the state is generally being rolled back where possible in response to the global crisis.
"Denmark, Finland, Norway and Sweden all belong to the exclusive club of countries with top ratings from the major credit rating agencies. These countries have status as safe havens in financial markets," says Helge Pedersen, the global chief economist at Nordea, a financial services group in the Nordic and Baltic region.
Economists and governments in other less-favoured economies are now starting to ask why it is that Scandinavian economies have been able to avoid the economic turmoil so successfully.
One crucial factor is that some Scandinavian countries received an early inoculation against the kind of boom and bust that has derailed larger and apparently more robust economies, which are still floundering since the US-led housing crash and subsequent financial crisis.
Read more:
Scandinavia avoids the financial crisis - The National
