Economic data has been softening further over the summer with especially Europe showing additional weakness in the service sector and continued recess
In our new Nordic Outlook published today, we continue to expect a modest slowdown in the Nordic countries, but have revised up GDP expectations for Denmark in light of Novo Nordisk's improved outlook, and revised down for Sweden in light of disappointing data for Q2.
The US economy is developing as hoped for by the central bank, with inflation coming down and the labour market cooling without signs of the economy falling into recession, causing relief in equity markets. In the euro area, by contrast, indicators are pointing to recession here in H2, while inflation has not yet eased enough.
Concerns over the Chinese economy are increasing. Growth is likely to slow down, but we expect a financial crisis to be avoidedhas been softening further over the summer with especially Europe showing additional weakness in the service sector and continued recession in manufacturing. So far, the euro area labour market still looks solid, though, and core inflation remains sticky above 5%. The tight labour market has also pushed up wage inflation to around 5%, keeping inflation pressures sustained for now. However, we expect the weakening economy to push unemployment higher and wage inflation gradually lower in the medium term. We still have not seen the full effect of the monetary tightening, which should work to keep growth subdued over the coming year.
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