Hello and welcome to our webinar marking the release of our brand new Nordea Economic Outlook. My name is Terri Baines, and today I'm very happy to have with me in the studio Nordea's Group Chief Economist, Helge Pedersen. He's going to walk us through highlights from the report. The webinar will last roughly 30 minutes. Helio will give his presentation first, then we will have a brief Q&A session at the end. At the very end of the webinar, a short survey will pop up on your screen, and we would really appreciate your feedback on that. Without more from me, I will hand it over to Helge. Thanks a lot, Terri, for the kind introduction, and it's a great pleasure for me once again to walk you through our new Nordea Economic Outlook. This time we have actually called it The Steady Path, and it's a reference to monetary policy rates, which we now expect to be relatively steady over the forecast horizon. Also, remark on the picture that there is a mountain in the back, and there might be something to be climbed going forward. Let's start with the big picture, where the good news is that the uncertainty about the global economy has eased as the U.S., has now reached trade agreements with most of the big countries. The effective U.S., tariff rate is probably going to end between 15% and 20%. That's high. That's a high since the 1930s, but we still believe that it will be manageable for most countries, also bearing in mind that these new tariffs will be shared between exporters, importers, and consumers. Still, it's our expectation that the U.S., economy will slow down while Europe is likely to see some better times. I will be more in detail with that a bit later, as a positive risk scenario is that Europe is likely to benefit the most from a possible truce or even a peace agreement in Ukraine. Growth in the Nordics has been on a diverging path. It has been strong in Norway and Denmark, and most sluggish in Sweden and Finland. We believe that there are very good opportunities for a strong recovery in domestic demand in all of the four Nordic countries, which is good as there still are a lot of uncertainties related to the global trade regime. Inflation is now under control in most countries, but it's likely to increase in the U.S., due to Trump's tariff policy. That will also possibly have an impact on monetary policy as we only expect the Federal Reserve to cut once, while we do expect that the European Central Bank is done with cutting rates. I will be a little more in detail with that later on in my presentation, but we should also bear in mind that quantitative tightening continues, that will all else equal imply a steepening of the yield curve, and a steepening that will also be more pronounced since public finances are under pressure all over these days as more money has to be spent on defense, on interest, on the debt, the aging population, and the green and digital transition. Something remarkable has happened with volatility in financial markets over the summer. It has dropped really much. There is now a high degree of calmness in financial markets while we saw the opposite in the beginning of the year. Let's return to some of the most important topics for this Economic Outlook: world trade. The good news is that it has not collapsed amid Trump's new tariff regime. As can be seen from the slide, we actually saw a record high in global trade just around the so-called Liberation Day, April 2, when Trump announced his new tariffs on the rest of the world. Since then, it has fallen a bit, but it is still on the trend line from 2022 onwards. Also, remark that the slope of this trend line is exactly the same as it was in the years between the global financial crisis and COVID. Nothing has changed much when it comes to global trade. It continues to grow, but at a much slower speed than we were used to in the years of globalization from the beginning of the century until the global financial crisis. The good news is that trade hasn't collapsed, and that's also one of the reasons that the uncertainty related to trade with the U.S., has actually declined when asking business leaders around the world. As you can see from the slide, it skyrocketed. The uncertainty related to U.S., trade is still at an elevated level, but it has fallen quite significantly. Still, it is a bigger worry than geopolitics amongst business leaders around the world. There is still uncertainty related to trade with the U.S., and world trade in general, but not at the same level as it was around Liberation Day. Also, financial stress has decreased significantly, as we can see from this slide. It peaked around Liberation Day, but it has fallen since then, and actually, there is a quite remarkable degree of calmness in financial markets right now. We are nowhere close to the stress which we saw around COVID. That's also good news, also good news for the Economic Outlook. If we look at the Purchasing Managers Index for China, the euro area, and the U.S., as you can see on the left hand of the chart, you see that the U.S., is actually standing at 55 right now, and 50 is the threshold between increasing and decreasing economic activity. There is actually a quite good speed on the U.S., economy right now, maybe surprisingly well, given the new tariff regime. It's more sluggish in China, it's more sluggish in Europe, but the good news for Europe is that it has come above 50. There is actually positive growth in the eurozone right now. It's just very weak, but there will be better times ahead, as I will show on the next slide. Some of the consequences from the new tariff regime, here are some calculations from Yale University, the Budget Lab, as you can see on the right hand of the chart. Their estimation is that the U.S. Consumer Price Index could increase by 1.8% from the tariffs. It could lead to an income loss of $2,400 per household in the U.S., quite significant. That will have a growth impact, which is negative. Growth will be a half percentage point lower in the U.S., than without the tariffs. Also, the unemployment rate is going to increase, not that much, but still by around 0.7 percentage point by the end of next year. Something which also needs to be emphasized is that all tariffs today are going to raise $2.7 trillion U.S. dollars over the coming 10 years. If we bear in mind that the deficit, the public finance deficit in the U.S., stood at $1.8 trillion last year, and that the big beautiful bill is under finance, then the conclusion is clear. There will still be doubt about the sustainability of the U.S., debt going forward. As mentioned, Europe is still stagnating, but better times are ahead, and they are not least related to the fiscal expansion, which we will face in Europe in the years to come. A fiscal expansion which is focusing on the defense sector, and when it comes to Germany, on infrastructure, where this new German infrastructure fund is going to spend €500 billion over the coming 12 years, from which €100 billion will be dedicated to the green transition. That is likely to kickstart a stronger growth path in Europe in the years to come. It's also characteristic for both the eurozone and the U.S., that labor markets are still quite strong. Actually, unemployment is record low in the eurozone. It has started to increase a bit in the U.S., t hat could be a consequence of the new tariffs, but still not to levels which are in any way worrisome for, say, the central banks. Consumer prices fall quite significantly in the years after the high inflation in 2022 and 2023, so some remarkable falls both in the eurozone and the U.S. Now it has declined to the target in the eurozone of 2%, but it has started to increase in the U.S., where it now stands at 2.7%, somewhat higher than the target for the Federal Reserve. We could expect that the tariff policy is likely to put another upward pressure on prices in the U.S., as we saw before with the calculations made by Yale University, the Budget Lab. There are some indicators which are actually telling us that there will be an inflationary pressure in the U.S., in the months to come. As we can see, input prices, again, this is taken from the Purchasing Managers Index in August, then input prices, they have started to increase quite significantly within the manufacturing sector. There are no worries around delivery times, but also service input prices are on the rise, and that will eventually be passed through, to a certain extent at least, to the consumers. We can expect inflation to pick up in the U.S., in the months to come. On the contrary, there seems to be no big inflationary pressure in the eurozone. Input prices are not increasing. They are for when it comes to service prices, but there is no acceleration in the increases. A bit problematic when it comes to the growth outlook for both the eurozone and the U.S., is actually that consumer confidence has fallen to relatively low levels, and they keep on falling in the U.S. We should bear in mind that private consumption makes up around 70% of the U.S., economy. If the consumers are worried, or if they feel that they have seen their purchasing power being eroded, then there is a risk that the U.S., economy will actually, in contrast to what we saw from the business survey, that it will start to stagnate. That is something which is, of course, also in the mind of the central banks. In Europe, it looks a bit better. Consumer confidence is at a low level, but it's not falling any longer. There are actually possibilities that we will see a pickup in consumer confidence in Europe as purchasing power is being regained since wages are now increasing faster than inflation. Now let's take a look at the Nordic economies. They have been on a diverging path over the past few years. Here we have made some other reference points, the U.S., economy and Germany. We can see that there has been really remarkable growth in the U.S., economy since the pandemic. Also, Denmark has been doing fairly well. Norway too, while the Swedish economy has been stagnating over the past few years, and the Finnish economy actually has been stagnating ever since the pandemic. We can group the Nordic countries in two. Denmark and Norway have seen high growth since the pandemic, and then Sweden and Finland have been hit harder also by the increase in interest rates after the high inflation. The transmission mechanism just simply works faster in Sweden and in Finland than in Norway and Denmark. Exports have been one of the key drivers for the success of the Danish economy. Actually, the largest share of growth in Denmark over the past few years stems from this impressive development in exports. Also, the Swedish export sector has been performing well. In particular, service exports have been growing fast. It has been more sluggish both when it comes to Norwegian and to the Finnish exports. Now, again, returning to how much does it matter for the Nordics that we now have the new tariff regime in the U.S. I would say that there are good possibilities that it will be only having a limited impact on the growth outlook for the Nordic countries, since they are not really very much reliant on the U.S., as an export market. Exports produced in the countries makes up, and here it's goods exports, makes up only a few percentage points of the country's GDP. Ireland could be hit hard. The Nordics are not very exposed to the U.S. As we can see in the right-hand charts, Europe matters much more. With these expectations that the European economy will start to grow fast in the years to come, the export opportunities on the European market can easily outpace the risks of having a more problematic export situation to the U.S. Actually, if we look at U.S., trade numbers, we can see from these four charts that the Nordic countries' exports to the U.S., have not really been hit yet. You can see up to the upper left-hand chart that's actually the U.S., imports from Denmark. It's a dark blue one, and you can see it has actually picked up recently while U.S., exports to Denmark are stagnating. The Danish trade surplus with the U.S., has actually increased over the past few months. You can also see from the other countries that there is no really sign of a drop in the U.S., imports from neither Finland nor Norway or Sweden. That's also good news. Still, there are risks related to exports. The hope is that private consumption and other parts from the domestic demand can take over as the growth engine. Here I will concentrate more on private consumption because, as you can see, it has been relatively sluggish growth in private consumption over the past few years. That is maybe a bit paradoxical since the economic environment as such for a pickup, at least in Norway and Denmark, seems really strong. The labor markets are strong in Denmark and Norway, also reflecting the GDP growth numbers as we saw before. While the unemployment rate in both Sweden and Finland has actually increased over the past few years, that is something which, of course, can hold back consumer confidence in Finland and Sweden, but not really in Denmark and Norway. Also, like I said before, in the eurozone, real wages are increasing now. When it comes to the Nordics, wage growth has been high over the past few years. It's still very high in Norway. It has started to fall in Finland, but it's still on high levels historically in both Sweden and Denmark. In the Nordic countries, we actually see that also there, the consumers are, the households are regaining their purchasing power. Consumer prices are rising a bit too fast now in both Norway and Sweden, but with lower rates than wages. Inflation seems to be better under control in the countries having fixed exchange rate regimes like Finland and Denmark, Finland having the euro, and Denmark having its currency pegged to the euro. In Norway and Sweden, where the depreciation of these currencies over the past few years has given rise to somewhat higher imported inflation than in Finland and Denmark. Another thing which should also boost consumer confidence is the fact that house prices have actually risen quite sharply, again mostly in Denmark and Norway, but they have passed the trough in Sweden. In Finland, it's another situation. The Finnish economy is the laggard right now in the Nordics, and house prices are still falling there, but not as much as they did when interest rates were increased in 2022. Now when rates have started to fall in most countries, there should be good possibilities that it, with a little lag, also will have an impact on housing prices. Another characteristic of the Finnish housing market is that there has been a fairly high supply of new houses to the market in the foregoing years. That is in contrast to the situation in the other Nordic countries where the supply of houses has been low. Also, building started, as you can see here, that is one of the consequences of the high inflation and high interest rate impact. rate impact. There is a pickup in particular in Denmark. In Norway, we have passed the trough but still are seeing negative growth rates year- over- year. In Sweden and in Finland, it has started to flatten out. With the new and lower interest rates in mind and the increasing house prices in mind, there are good expectations that we will see a pickup in construction activity in the years to come. That could also boost economic growth. All that sums up in our forecast for the real economies. As you can see here, our expectation now is that the global economy this year will grow by 3.1% and then almost the same next year and in 2027. This is the first time that we are producing forecasts for 2027. The U.S., slowed down from 2.8% last year to around 2% now, but we keep it relatively stable at around 2%. There is no recession in sight in the U.S., economy. In the eurozone, as mentioned, there is a pickup, 0.7% in growth last year, 1.2% this year, and then an acceleration to 2% in 2027. The Chinese economy probably overstated the numbers, official overstated the numbers, but a steady growth close to 4.5%. The Danish economy has a significant downward revision of our forecast for this year, but that's partly due to some technical matters since Denmark statistics have revised down the Danish growth profile for the foregoing years. Next year, 2.3% is still above the potential in Denmark and 1.9% in 2027. The Finnish economy has been stagnating. We expect a pickup next year and in 2027 up to 2%. The Norwegian economy is doing really good. Strong labor market, housing market, etc, and growth of around 2% this year and a little lower growth forecast for the coming two years. There is an expectation that the Swedish economy eventually will take off next year, where we expect growth to be as high as 2.5%, double up from this year. We should bear in mind both in Denmark, Norway, and Sweden, we are seeing public elections taking place, or general elections taking place, which usually also lead to some fiscal expansion. That is also what will be seen in these countries. The changes from our May forecast can be seen here, an upgrade of the global outlook by 0.2 percentage point this year and 0.1% next year. We are a little more optimistic on the global outlook now than in May because there is more certainty about the U.S., trade regime. Upgrade also for the U.S., economy, upgrade this year for the eurozone, but a downgrade next year. China upgrade this year, next year, and then this significant downgrade of the Danish forecast this year, again primarily due to some technicalities from the revision of the GDP numbers from Denmark statistics. Finland have been downgraded. They have disappointed still. This year we are also downgrading for Sweden. The first half of the year disappointed compared to our expectations in May and then an upgrade of the Norwegian economy. Now let's focus a bit on the financial markets outlook. Right now, the U.S. Fed funds target rate stands at 4.5%. Jerome Powell is under severe pressure from Donald Trump, President Trump, to cut rates. Actually also from financial markets, financial markets are expecting five to six cuts from Fed. It's still not our opinion that the Fed is going to give in for that pressure. As mentioned, we do expect inflation to pick up, and we expect also to see some uncertainty to the growth outlook to the labor market in the U.S., In that sense, it's actually relatively wise from Jerome Powell and company to have this wait and see stand still. Our expectation is they are going to cut rates now here in September, but only once and then stand at 4.25% for the rest of the forecast horizon. In Europe, Christine Lagarde and ECB have been much more aggressive and active on monetary policy. Rates have been halved from 4%- 2%, but we don't expect further cuts from the European Central Bank, actually with a better growth outlook. It's our expectation that the next move from ECB will be a hike, and that will be in 2027. In the Nordics, we also expect that both Riksbanken and Denmark's Nationalbank are done by cutting rates. We still expect Bank of Norway to cut once more. That will also be here in September, and then that is also done from Bank of Norway. You can see our forecast here in the table to the right. We are at the trough or at the bottom for interest rates now from monetary policy rates when it comes to Denmark, Sweden, the eurozone. We expect one more cut from Fed and from Bank of Norway, and then they are done. That is a steady path going forward until 2027, where we could see the ECB and Riksbanken starting to hike rates again, and Denmark's Nationalbank will then follow suit, having the 40 basis point spread to the ECB in place still. When it comes to longer-term bond yields, they have found a new and much higher level. Actually, from all the things I mentioned in the very beginning of my presentation, we would expect this increasing pressure on longer-term bond yields to continue. To the right, you can in the table see our forecast for 10-year government bond yields. We expect them to increase throughout the forecast horizon, not to very high levels, but the risk is to our mind that they could go even higher than where we are predicting them. When it comes to the FX market, it has been really volatile in the first half of the year. Also, in FX markets, we have seen much less volatility, much more core markets since July. In the beginning of the year, we did see some very big fluctuations, not least when it comes to the NOK, which weakened significantly in the beginning of the year. This is actually back from 2020. We also saw throughout this year that the U.S. dollar started to weaken really significantly and is now down by around 10% versus the euro since the beginning of the year. We are of the opinion that the dollar depreciation can continue. It's not so much about a Mar-a-Lago accord or whatsoever. It's much more about the development in global growth. We are seeing a more synchronized global growth, the U.S., going down in speed, the eurozone up. In such periods, we usually see that the dollar depreciates. That is being reflected here in our table, where we see that the euro/dollar could go to around 1.25, maybe 1.30 by the end of our forecast horizon, i.e. by the end of 2027. We expect both the NOK and the SEK to be appreciated, to be stronger against the euro over the forecast horizon. Finally, we have had also in the beginning of the year very, very volatile equity markets. We saw the biggest correction in equity markets around Liberation Day, the 2nd of April. That was the biggest correction since COVID. Since then, equity markets have really had a very strong comeback. As we can see, the European stocks index is up by around 12% over the year, driven very much by the German equity index, the DAX, Rheinmetall, defense sector, et cetera. NASDAQ and S&P 500 have seen some very strong comebacks in markets. Again, a sign that all this fuss around the Liberation Day and trade tariffs is actually not of a very big concern right now for financial markets. The Nordic OMX 120 has been the poorest performing index this year, and that is to a very large extent because of a very poor performance from the Danish equity market this year. That actually marks my presentation right now. Back to the conclusion, which was also the starting point. The uncertainty around the global economy has eased a lot, and we do not expect any major setback in the global economy over the forecast horizon. We have to believe that we will see a slowdown in the U.S., economy and then better times in Europe. Growth in the Nordics will also be more synchronous over the forecast horizon as the Swedish and the Finnish economy start to pick up. Inflation is under control. It is going to increase in the U.S., and that's why we expect the Federal Reserve still to be reluctant to cut rates aggressively. Longer-term bond yields, as mentioned, are going to increase. We expect this steepening of the yield curve. This remarkable calmness right now in financial markets is a big question mark whether it can last, but it's also difficult to see what will trigger the next big correction. That actually marked my presentation, and we are now open for questions. I can actually see that there have already come quite a few questions, and I will do my best to answer them here. One question on the inversion of the U.S. One question on the inversion of the U.S. Treasury yield curve for predicting recessions lost its predictive power compared to earlier. That's a very good question. I would say yes, it has, and it has lost its predictive power because we have seen this intervention in the yield curve also from the central bank. It is a little more determined by the policymakers today. We have had a long period with an inversion of the yield curve, and that's usually a very good predictor for a recession in the U.S., economy, but we haven't seen it yet. I would say that it has lost some of its predictive power compared to earlier. There is a question on should we expect interest rates to go low after 2026, maybe even in Europe and the Nordic region when the U.S., cuts its rates aggressively next year. It is not our belief or our forecast that the U.S., is going to cut rates. I would say that if they do so, and if U.S., longer-term bond yields start to decline, usually there are spillovers also to the European bond markets, and they could also go lower. Again, that's not our baseline scenario. We don't really believe in longer-term bond yields going lower. We have one question, which is on the outlook for the European Union in terms of growth expectations given the ongoing war, trade tensions with the U.S., including recently banned development projects managed by ERSTER, and growing competitiveness of China. Yes, I have already given our outlook, and we do expect that the European economy will start to pick up again. You're perfectly right that the environment in which the European Union is now operating is different from the past. Europe will need now to focus much more on strategic autonomy, and that will lead to this kind of self-fulfilling, I think, economic upswing in Europe, spearheaded by the fiscal expansion. The other questions here, I think we have already touched upon them, high and low for euro/dollar in the next 12 months. As mentioned, we expect a depreciation of the U.S. dollar, but there could be, of course, fluctuations around that trend in the years to come. The inflation outlook in the Nordics, we do believe that it will be controlled, but we don't expect to see very low inflation rates again in the Nordics. All that you can read about in the Nordea Economic Outlook. Time has run out now, so I would like to thank you for your attention and hope to see you back again when we have a new economic outlook being published in the beginning of the new year. Thank you.