SEB Nordic Outlook: In anticipation of lower interest rates and significant election outcomes
According to the latest global and Baltic economic outlook published in SEB Nordic Outlook, 2024 has begun on a contradictory note: on the one hand, economic development prospects seem promising, but on the other hand, global security continues to deteriorate and create uncertainty. A number of conditions need to be met to create a strong foundation for growth in the coming year. However, we should not forget that 2024 is a year of super elections. Against this backdrop, the outcome of many important issues will be determined by the vote of the electorate.
Key insights from SEB Nordic Outlook:
- The promising prospect for the economy is falling inflation, which strengthens the case for an interest rate cut
- In 2024, the US economy will slow to 1.6%, while the eurozone economy could grow by 0.5%. Global growth of 3% is expected, which is seen as rather tepid
- The high interest rate wall that has built up could have a delayed negative impact on the real economy and the financial system
- A return to inflation cannot be ruled out – it could be triggered by geopolitical tensions or the emergence of new, longer-term forces (transition to renewable energies, development of artificial intelligence)
- The Baltic economies are set to experience a gradual recovery this year. The Lithuanian and Latvian economies are expected to grow by 1.5% and 2%, respectively. Inflation in Lithuania and Latvia will fall to 2% and 1.4%, respectively, this year
- The Estonian economy is in a deep recession, its GDP will shrink by a further 0.5% by 2024, while inflation is expected to be 3.8%
