ETF Trends
ETF Trends

Nordic countries saw their economies pummeled at the start of the financial downturn, but their smaller markets and related exchange traded funds (ETFs) were among the first jump back. Some are even growing so quickly that rate hikes are needed to cool things off.

Of all the western European countries, only Sweden and Norway’s Central Banks have recently deemed it safe to increase rates, according to The Swedish Wire. Sweden raised rates to 0.5% from 0.25% on strong economic numbers, with household spending jumping 3.5% in the first quarter, which was better than what most economists expected. The Swedish economy expanded 1.4% compared to the previous quarter and 3% year-over-year. [Europe ETFs: Sidestepping the Ailing Countries.]

The Riksbank revised upward its economic growth forecast to 3.8% for the year from its 2.2% estimate in May, but it expects that slower global growth may keep the Sweden’s growth at just 3.6% in 2011. The Central Bank also expects to keep rates at 0.5% through the third quarter before raising it to 0.9% in the fourth quarter. [Know Which ETFs Come With Euro Exposure.]

Government stimulus of around 1.2% of GDP this year and increased demand for Sweden’s exports has pushed along the recovery, along with housing prices, reports Johan Carlstrom for BusinessWeek.

The Riksbank calculates that consumer prices will increase 1.2% this year, 2% in 2011 and 2.1% in 2014 – the Bank targets 2% inflation. The Bank also predicts that unemployment will average around 8.9% for the year, 8.5% next year and 8.1% in 2012.

This is no surprise: the Nordic countries are among the world’s happiest, writes Francesca Levy for Yahoo! Finance. The five happiest countries in the world include Denmark, Finland, Norway, Sweden and the Netherlands. Happiness, as quantified by the researchers conducting the survey, is seen as a combination of high per-capita income and psychological well-being. [Netherlands ETF: Flying High, But Cautiously.]

For more information on Europe, visit our Europe category. You can research holdings and weightings of both of these ETFs, as well as view fact sheets, on our ETF Resume:

  • Global X FTSE Nordic 30 (NYSEArca: GXF)

  • iShares MSCI Sweden (NYSEArca: EWD)

Sweden ETF

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.