Pasaulio ekonomikos apžvalga „Nordic Outlook“ (anglų kalba)

Global tensions hamper growth

After a summer of geopolitical uncertainty, new ‘trade agreements’ and fluctuating economic data, we are gearing up for a very interesting autumn. Some uncertainty has eased now that the tariffs on US imports from a number of countries have been set. At the same time, the new agreements lack details, and no one seems to know for sure how they will work or how long they will apply. The trade relationship between the US and China is also uncertain. We only know that negotiations are underway and that deadlines are repeatedly postponed. Another issue is how the tariffs, now the highest since the 1930s, will impact the economy. They are estimated at the current level to bring in around USD 400 billion a year to the US Treasury, but who will pay? Exporters, importers or households (in the form of higher prices)? There is no clear indication yet how the bill will be divided, but it is an important factor in how trade and the economy will develop moving forward.

In real economic terms, the US economy looked robust – until it didn’t. A weak employment number for July was accompanied by significant downward revisions to previous months. Suddenly, the economy and the labour market didn’t look as strong, causing President Trump to take drastic action – he abruptly fired the Bureau of Labor Statistics commissioner and replaced her with a candidate that hopefully presents numbers that better align with the president’s view. This also put the Federal Reserve in a trickier situation: should it focus on the slower growth and weaker labour market and cut rates, or on a consistently strong risk appetite and high inflation and keep rates restrictive? 

Europe also has more than its share of challenges. During the spring and summer, there has been talk of both a fiscal “bazooka” and aggressive countermeasures if the US proceeded with tariff hikes. The tariff talks concluded, however, with a “trade agreement,” where the US unilaterally raised tariffs while the EU cut tariffs and also promised major investments and purchases of US weapons and energy products. Surprisingly one-sided in the eyes of many, but the explanation perhaps can be found in security policy, where the EU is still dependent on the US, not least to help Ukraine reach an acceptable conclusion to the war. All in all, US economic growth looks like it will continue to outpace Europe’s, though neither of the two continents is impressive right now. 

In Sweden, the economy remains sluggish. While there are certainly glimmers of light, the big picture is a disappointment. Household consumption in particular is weaker than expected. Global uncertainty and scars from years of runaway prices continue to weigh on consumer sentiment, so neither rising real wages nor lower interest rates and taxes are helping much (at least not yet). We continue to believe in a Swedish recovery, but that it will take a while. 

Now we await an eventful and exciting autumn and look forward to discussing domestic as well as international economic issues with you. 

This issue of Nordic Outlook also includes in-depth themes that address the following topics:
• Those in debt – On indebted countries 
• Water stress – From risks to investments 
• Consumption – Households remain cautious 
• Stablecoins – Soon in every American’s wallet?

We wish you pleasant reading!