Experts of the Analytical Center state in the June Bulletin on the global economic trends that the Scandinavian economic system has been one of the most stable and successful in the world for years. It is based on the welfare state concept, which provides for the key role of the state in economic regulation and ensuring the social well-being of residents.
The authors of the study write that large investments in human capital and social protection are provided through high tax revenues for the treasury. This, along with national cultural characteristics, allowed countries to create developed innovative economies and reduce social inequality to a minimum. The states of the region retain one of the highest levels of human development in the world, but certain social and economic problems are associated with the welfare model.
Thus, the Bulletin states that a high tax burden in Norway, Sweden and Denmark entails transferring of business to countries with a more favorable fiscal mode, and a large influx of migrants who expect to receive social benefits becomes a heavy burden for the Scandinavian government budget.
Experts say that all Scandinavian countries have demonstrated steady growth in GDP over the past five years. According to them, key overall economic risks for Scandinavia include the vulnerability of the construction industry, the high debt burden of the population, and their dependence on the global economy due to high degree of openness and demographic problems.
Experts predict that the growth rate of GDP in Sweden in 2019-2020 will decline due to reduced personal consumption. At the same time, according to the forecast, economic growth in Norway will accelerate due to an increase in household consumption amid rising wages and a decrease in unemployment. According to experts, increasing exports will stimulate Danish GDP growth in the first half of 2019, but then its influence will weaken due to a decrease in external demand. However, rising household incomes and low unemployment will support domestic demand.
For more details, see the Bulletin "Scandinavia as the Welfare State".
For other bulletins on the current trends in the global economy, see Publications.