A DIFFICULT RETURN TO (SOME KIND OF) NORMALCY? ●
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NEWSEC PROPERTY OUTLOOK • AUTUMN 2021
A DIFFICULT RETURN TO (SOME KIND OF) NORMALCY? Klas Eklund, Senior Economist, Mannheimer Swartling
After a year of wild gyrations in the wake of the pan demic, the global economy will gradually return to more normal growth. The “new normal” will, however, be different from the pre-pandemic normal. New virus mutations may come and go, and we will need continu ous new vaccine jabs. Supply disruptions will be with us for some time, as will bottlenecks in the labour market. Inflation will be higher than before the pandemic. Central banks will struggle with exit strategies. Property markets will still be supported by low bond yields – but headwinds will increase as the demand pull
from the pandemic and ultra-loose policies wane. The main risk – both in the Nordics and other developed economies – is that inflation stays high and inflationary expectations rise, which would force central banks to abandon their loose policies and cause strains in asset markets. All this holds also for the Nordics, who in general will perform better than Europe as a whole. Inflation will fall back after peaking this year and low rates will remain. Here, Norway is the odd one out, with a steeper return to normal interest rates.
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