Urban landscape of Nordic countries is dominated by the respective capital cities of Sweden, Norway, Finland, and Denmark. For example, the size of consumer markets (as measured by total annual household disposable income) of the capital cities was as much as three to five times as large as the second largest cities in the respective country.
While the dominating role of capital cities is similar across Nordic countries, development of regional differences is forecast to follow different paths in Nordic countries. Norway and Denmark currently face the largest regional disparities among Nordic countries, and Oslo and Copenhagen will further distance themselves from smaller cities thanks to their fast growth of average income over 2014-2030. In contrast, Sweden and Finland are expected to continue convergence of among their regions and cities as smaller cities are forecast to perform better than the capital cities in terms of annual income growth.
Figure 1: Future Demographic Trends in Sweden and Denmark, 1980-2030
Over the last decade (2004-2014) population by age in Sweden was most similar to Denmark‘s demographic structure. Both countries had population peaks in the cohorts of 35-45 and 55-65 years of age and the average age in both countries was around 40 years. However looking into the coming years, the similarity is going to fade away: over 2016-2026 Sweden will be more similar to Norway, France, Azerbaijan or Belgium than to Denmark, which would only rank as number 13 among all countries in terms of similarity to Sweden‘s age structure. The differences will only increase with time. Why do we see such a trend?
The reason for this lies in immigration flows and particularly – the age structure of immigrants (datagraphic). While Sweden attracts more immigrants (relative to its population), it is also a country popular among younger immigrants of 20+ years of age. Immigration rates to Denmark are slightly lower, besides immigrants to Denmark are slightly older - mostly of the age 30+. This minor age difference has a large impact on fertility rates. Even though historically, index of aging (% of persons aged 65+ per children aged 0–14) was always higher in Sweden than in Denmark, due to the above-mentioned tendency Denmark is expected to become “older” than Sweden in 2017. This will result in diverging population structures in both countries over the next decade and further.
Figure 2: Russian Slowdown Scenario, Effect on GDP for Nordic Countries, 2015-2019
Source: Euromonitor International
Among Nordic countries, Finland would be the most affected by a recession in Russia. However, the effects would not be especially large for Finland either. In the Russian recession scenario, where Russia’s real GDP contracts by -2.9% in the first year, Finland’s real GDP growth would only be 0.2 % slower relative to the baseline.
There are various reasons why a recession in one country has an effect on economic growth in another country - trade linkages, financial flows, consumer confidence spill-overs, etc. Euromonitor International’s Macro Model allows quantifying how a boom or slowdown in one country might affect another country described by four key macroeconomic variables – real GDP growth, inflation, unemployment and interest rates.
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