Regional economic resilience amid uncertainty
DATA AND
Regional economic resilience amid uncertainty
DATA AND
Introduction
Less than four years after the COVID-19 pandemic, the global landscape of international trade and economic policy is undergoing a period of heightened instability. The international economic order, which for decades has been characterised by predictable, rules-based principles is increasingly under strain, as geopolitical tensions and uncertainty weigh on market sentiment and economic prospects worldwide. For small, open economies such as those of the Nordic countries, given their high dependence on international trade and stable external economic relations, these shifts are particularly significant.
Since 2022, the Nordic Region has felt the ripple effects of escalating geopolitical tensions and breaches of international law, most notably Russia’s violation of Ukraine’s sovereignty and territorial integrity. These developments contributed to a sharp increase in the cost of living across the Region, and prompted central banks to adopt restrictive monetary policies (Calmfors & Sánchez Gassen, 2024). From 2025 onwards, Nordic economies have also been affected by heightened trade-policy uncertainty, following the US administration’s shift under President Trump’s second term. This has increased uncertainty for both businesses and financial markets, particularly in export-oriented sectors with high levels of exposure to the US market (Abdulnour, 2025).
Against this backdrop, this chapter explores the resilience of Nordic regional economies in the face of global economic turbulence. It begins by analysing recent international trade flows at both aggregate and regional levels. The chapter then turns to regional accounts, before concluding with an analysis of how economic instability is reflected in business demographics. Together, these analytical building blocks address two related research questions: What is the level of exposure to geopolitical instability and trade volatility among the Nordic economies, and how are they responding to external economic pressures?
Evolution of international trade
The general increase in trade tariffs adopted by the second Trump administration introduced a pronounced level of uncertainty in the global economy, leading to diminished global economic dynamism in 2025 and worsening prospects for 2026. Expectations of rising trade tariffs – reaching an estimated 19.5% by August 2025 – fuelled a surge in goods shipments to the US during the first quarter of 2025, which temporarily bolstered industrial production and retail inventory levels. This trend began to reverse as the tariffs were introduced during the second half of the year, signaling a cooling in global trade activity (OECD, 2025).
So far, the impact on Nordic trade has been moderate. Aggregated import and export trends were broadly flat, with marginal average monthly shifts of -0.1 and 0.3 percentage points, respectively, in 2025 (Figure 8.1). Nevertheless, notable differences exist between individual Nordic economies: absolute changes in total import values ranged from 0.6% in Finland to 6.4% in Denmark, while exports shifted from 2.7% in Finland to 6.8% in Denmark in 2025 relative to 2024. EU import and export trends during the same period were more mixed. While a substantial month-on-month increase in exports during the first quarter (3.6%) was offset by subsequent monthly declines (-1.2% on average from Q2 to Q4), EU imports decreased more steadily, with an absolute increase of 2.4% in the value of total imports in 2025 compared to 2024.
Figure 8.1: Monthly export (above) and import (below) activity in Nordic economies integrated into the EU. Source: Eurostat. Data are expressed as percentage change in value compared with the previous month, indexed to the average level in 2019. Data are seasonally and calendar-adjusted. |
The National Statistical Institutes’ (NSIs) annual import and export figures show that Norway, Denmark and Sweden recorded positive trade balances in 2024, while Finland had a slightly negative balance. Figure 8.2 provides an overview of trade balances in the largest Nordic economies in 2024. Each bar represents one country and is divided into seven colours representing the major product categories. The bars are split above or below the equilibrium line, which marks the point at which the total value of imports equals total exports. Each product category appears only on one side of the equilibrium line, depending on whether the country is a net exporter or importer of that category.
Figure 8.2: Trade balance by product, in value, 2024. Source: NSB. SIT06 ■ Other manufactured goods and related materials equipment tranactions not classified elsewhere in the SITC products, n.e.s |
Norway’s substantial trade surplus in Mineral fuels reflects its strong specialisation in the oil and gas sector. The country also has a positive trade balance in Food, drinks and tobacco, which highlights the importance of fisheries and aquaculture. At the same time, Norway’s trade structure reveals significant import needs in machinery, transport equipment and other commodities, largely linked to extractive activities. Similarly, Denmark’s trade balance illustrates the central role of pharmaceuticals and agriculture, with large surpluses in Chemicals and related products, as well as Food, drinks and tobacco.
Against these import-export profiles, absolute exposure to US tariffs is moderate in Iceland, Sweden and Finland, and lower in the remaining Nordic countries. According to the UN Comtrade Database (United Nations, 2025), in 2024 the United States absorbed 11.5% of Iceland’s total exports, 9.6% of Finland’s, 8.7% of Sweden’s, 5.4% of Denmark’s and 3.4% of Norway’s exports by value. Exposure becomes more pronounced when examining specific product categories. For example, Iceland’s largest export to the United States consists of fish products, accounting for 12.7% of its total exports of that commodity. Finland’s largest export to the US is machinery, representing 11.5% of total exports in that category, while Sweden’s main exports to the US are machinery and mechanical appliances (11.3%). Denmark’s key export to the US is pharmaceutical products, although this represents only 1.6% of the total market size. Norway primarily exports oil products to the US, with a market share slightly above 1%.
However, exposure to US tariffs can be very high for specific product categories with lower overall export values but potentially high economic significance in particular regions. The US market absorbs more than 75% of Iceland’s exports in four product categories (vegetable saps and extracts, knitted fabrics, pigments and cement). In Finland, over one third of the total export value in seven product categories (including vegetable saps and extracts, pharmaceutical products, knitted fabrics, aircraft and parts thereof, and musical instruments) is shipped to the US. Similarly, more than a quarter of total exports of four product categories in Norway (slag and ash ores, paper fibres, textile fabrics and cement), two categories in Denmark (aircraft and parts thereof, and arms and ammunition) and two in Sweden (aircrafts and parts thereof, and works of art and antiques) are destined for the US market.
The marked differences in the export orientation of Nordic regional economies become evident when examining trade intensity by region, measured as export value per capita (Map 8.1, left). Relative to population size, Central Ostrobothnia in Finland is the most export-oriented Nordic region, with exports exceeding 36 thousand euros per capita in 2024. The majority of these exports originate in the Kokkola Industrial Area, the largest inorganic chemical industry ecosystem in Northern Europe, which specialises in battery components and circular economy solutions (KIP-Kokkola Industrial Park, 2025). At the other end of the spectrum, Gotland in Sweden is the least export-oriented Nordic region, with just 705 euros of exports per capita in 2024.
Most regions experienced growth in goods exported between 2019 and 2024 (Map 8.1, right). The largest increase in exports was seen in Gotland County – which, despite having the lowest export intensity, has seen many firms reorient their production towards international markets. Today, more than 120 enterprises in Gotland report their export activities to Statistics Sweden (SCB). Nevertheless, some Finnish and Norwegian regions have experienced declining exports, including Southwest Finland, Kymenlaakso – Kymmenedalen and North Ostrobothnia, as well as Akershus and Vestfold in Norway. These regions may have been particularly affected by geopolitical instability and the discontinuation of trade with Russia (in the case of Finland) or by volatility of exports in oil-related goods and services, including offshore logistics and maritime services (in the case of Norway). Despite these declines, these regions remain among the less export-intensive areas in the Nordic Region, with exports ranging from slightly over 1,200 euros per capita in Akershus to 17,245 euros per capita in Kymenlaakso – Kymmenedalen.
Map 8.1: Export-intensity of Nordic regions (left) and recent evolution of regional exports (right) in the Nordic Region. Source: Nordregio calculations based on data from National Statistical Institutes (NSIs). Export and import data refer to traded goods in economic value. National level data for Denmark, the Faroe Islands, Greenland and Iceland. Nordic average (exports in good by region, 2024): 13,351 EUR/capita Nordic average (change in exports in good by region): 130 |
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Resilient regional economies
Between 2019 and 2025, the Nordic economy underwent significant changes due to the COVID-19 pandemic, global trade shocks and growing geopolitical volatility. This context triggered adjustments in EU, national and regional economic development policies, including measures aimed at stimulating growth. During this period, economic performance was characterised by marked fluctuations. Following a sharp contraction in 2020 due to the pandemic, the Nordic economies rebounded strongly, and achieved a growth rate of 5.6% in 2021. This recovery was driven by a resurgence in consumer spending, increased exports and accelerated digitalisation, as firms adapted to their new operating conditions (Tapia & Tragotsis, 2022).
In 2022, Russia’s invasion of Ukraine disrupted these recovery trajectories. Nordic GDP growth continued at an average rate of around 1.3%, inflationary pressures intensified, and supply chain disruptions emerged. In 2023, growth slowed further, to approximately 0.4% at the Nordic level, as high inflation and high energy prices constrained household consumption. By 2024, the Nordic economy had entered a gradual recovery phase, with an average growth rate of 1.2% across the countries and regions. However, during the first half of 2025, economic conditions again became volatile due to renewed uncertainty surrounding global economic prospects following the US Administration's imposition of trade tariffs. Despite these challenges, most Nordic economies exhibited high levels of resilience, with average annualised economic growth reaching 2.0% during the first three quarters of 2025. This growth was largely driven by the significant expansion of Denmark’s and Sweden’s economies during that period, which recorded annualised growth rates of 3.4% and 2.4%, respectively (Figure 8.3).
Figure 8.3: Evolution of economic activity in the Nordic Region. Source: Eurostat. |
The evolution of regional GDP per capita across the Nordic Region between 2019 and 2024 reveals a heterogeneous and dynamic pattern of economic adjustment. Map 8.2 presents some data provided by the Annual Regional Database of the European Commission (ARDECO), which provides modelled estimates for NUTS 3 regions using upper-level data and identified proxies (Auteri et al., 2024). Certain regions display particularly strong economic resilience or moderate expansion, characterised by burgeoning economic activity and investment. Greater Copenhagen stands out, with an annualised GDP per capita increase of 4.4% during the period (1.4% in City of Copenhagen). This strength is largely attributed to the rapid expansion of the pharmaceutical industry (EC, 2025). Other regions benefiting from proximity to the Copenhagen agglomeration - including North Zealand and West & South Zealand - also recorded strong growth (2.5% and 2%, respectively).
Notably, two predominantly rural and intermediate Swedish counties with a strong industrial base - Blekinge and Västernorrland - also rank among the Nordic regions with the strongest economic expansion between 2019 and 2024. Blekinge, a dynamic export-oriented region in southern Sweden, recorded an annualised GDP per capita growth rate of 2.3%. Västernorrland County followed with 2% growth, as major investments in the green industry boosted the county's economy during that period.
In Finland, Satakunta experienced the highest average annual GDP per capita growth over the period (1.7%), supported by large-scale industrial facilities in metal production, mineral processing, and energy, alongside established competence clusters (Työ- ja elinkeinoministeriö, 2022). Ostrobothnia recorded the second-fastest GDP per capita growth in Finland (1.3%), also driven by a dynamic industrial base combined with a strong innovation culture and strategic positioning in key sectors of the green transition and transport electrification (see Chapter 10).
The Icelandic economy grew at an average annual rate of 0.7%, driven by the recovery of tourism following the pandemic and by comparatively lower exposure to rising energy prices for households and industries. Similarly, Åland recovered from a severe pandemic-induced contraction (-14.2% in 2020), returning to pre-pandemic levels by 2022. In Greenland, the GDP per capita increased by 3.7% between 2019 and 2023
, which signals an expansionary cycle in a remote, resource-rich economy.
At the time of writing (mid-November 2025), Greenland’s Statistical Office has not released GDP figures for 2024.
Map 8.2: Annualised percent change on regional GDP per-capita during the 2019–2024 period (constant prices, euros 2020). Source: Nordregio calculations based on data from ARDECO and Eurostat. National level data for the Faroe Islands. Nordic average: 0.01% Note: the data are based on modelled estimates and may differ substantially from official statistics, when available. |
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Conversely, several Nordic regions saw GDP per capita decline over the period, reflecting differences in economic structures and exposure to external shocks. In Norway, regional figures are significantly conditioned by the devaluation of the Norwegian krone against the US dollar and euro during the 2019–2024 period. This, together with fluctuating oil prices, may explain the negative GDP per capita trend observed in most Norwegian regions during that time. Based on the available data, Buskerud and Akershus were among the regions with the largest declines in GDP per capita (-2.3%), followed by Østfold (-2.1%), Troms (-2%), and Møre og Romsdal (-1.9%). Beyond the factors mentioned above, regional dynamics are often linked to downturns in specific market segments. For example, in 2020, Møre og Romsdal suffered a sharp contraction linked to restructuring in aquaculture, followed by reduced investment in construction during 2022-2023 (Zahirovic and Blytt, 2022; Hungnes et al., 2025).
In Finland, South Karelia saw a 2.2% decline in GDP per capita, followed by Kymenlaakso (-1.9%), likely reflecting geopolitical tensions along the Russian border since 2022, including the interruption of trade with that country. Helsinki-Uusimaa also recorded negative growth (-1.4%), with service-oriented activities performing below the national average since 2022. In Denmark, West Jutland (-0.8%) and Bornholm (-0.4%) showed the weakest economic performance, reflecting strong dependence on seasonal tourism, commuting patterns, and external demand. In Sweden, Gävleborg County recorded a contraction of 1.5% in 2019–2024, associated with a weakening productive base and population decline (Stockholm Business Alliance, 2024).
Overall, the Nordic regional economies demonstrated moderate resilience to external shocks in the post-pandemic period, despite a volatile geopolitical and economic environment. Most regions experienced positive growth between 2019 and 2024, particularly in Iceland and Denmark, while the picture in Sweden and Finland was more mixed. In Norway, exchange-rate movements and cost-of-living pressures had an effect on GDP per capita trends. Across the Nordic Region, rural regions (DGURBA classification; EC, 2021) recorded the highest median annualised GDP per capita growth (0.43%), outperforming both urban (0.42%) and intermediate regions (0.16%). These patterns suggest that exposure and vulnerability to external shocks vary systematically according to territorial characteristics.
While capital regions and major urban centres continue to display higher GDP per capita, the post-pandemic period has seen several rural and intermediate regions, particularly in Sweden and Finland, outperform urban areas in terms of growth. In an environment marked by uncertainty and structural change, this may create opportunities for new industries and actors to emerge. At the same time, persistent spatial disparities underline the need for targeted, place-based regional policies to address both long-standing and emerging territorial divides.
Business demographics
While the impacts of increasingly higher trade tariffs are expected to become more visible in the regional economies in the next few years (OECD, 2025), Nordic businesses have already faced a sequence of major shocks following the COVID-19 pandemic and the surge in inflation triggered by Russia’s invasion of Ukraine in 2022. An analysis of business demographics in recent years, specifically enterprise births and deaths,
provides insight into how the Nordic economies have managed turbulence and economic instability.
In business demography, enterprise births denote the creation of genuinely new active enterprises during the reference year. They capture new market entrants rather than administrative changes, and therefore exclude cases linked to mergers, splits, restructurings, or changes in ownership or legal form. Reactivations are only counted as births if the enterprise had been inactive for at least two consecutive years.
Enterprise deaths represent enterprises that cease all market activity and disappear from the business register. Deaths exclude cases where activity continues under another unit through mergers or takeovers, and are cancelled if the enterprise resumes activity within two years.
Like much of Europe and the global economy, the Nordic countries were negatively affected by the pandemic (Tapia & Tragotsis, 2022). However, somewhat counterintuitively, the number of enterprise births increased during the pandemic, while enterprise deaths declined. From 2022 onwards, enterprise births returned to levels closer to those observed before the pandemic in Denmark, Norway and Sweden, and continued to increase slightly in Finland up to 2024. At the same time, enterprise deaths rose beyond pre-pandemic levels in Sweden, Finland and Denmark. Norway, too, experienced an increase in enterprise deaths, albeit a more modest one. For Iceland, data are not available from 2021 onwards.
Map 8.3: Change in enterprise births (left) and deaths (right) from the pandemic to the post-pandemic period (comparison between the yearly average of 2020-2021 and 2022-2024). Source: Nordregio calculations based on data from Tillväxtanalys (Sweden) and National Statistical Institutes (NSIs; Denmark, Finland, Norway). No data for the Faroe Islands, Greenland and Iceland. Nordic average (enterprise births): -0.5% Nordic average (enterprise deaths): 2.5% |
See and download map (left) in online gallery and map (right) in |
Map 8.3 (left), which illustrates the change in enterprise births from the pandemic years to the post-pandemic years, shows that the decline in enterprise births after the pandemic is broadly consistent across all regions in Denmark, Norway and Sweden, with Norrbotten being the only region close to stability. Finland stands out as a countertrend, with increasing enterprise births in several regions, most notably Lapland, North Ostrobothnia and Pirkanmaa. However, almost all Nordic regions have seen higher levels of enterprise births than in the pre-pandemic years.
Map 8.3 (right) shows a consistent increase in enterprise deaths from the pandemic to the post-pandemic years across the Nordic Region. Particularly high increases are observed in a contiguous group of Finnish regions stretching from Uusimaa via South Ostrobothnia to North Karelia, and in Sweden from Uppsala through the Stockholm area and further south towards Östergötland and Kalmar. Vestland in Norway is the only region where enterprise deaths decreased or remained almost unchanged after the pandemic. In most Nordic regions, enterprise deaths now exceed pre-pandemic levels, i.e., prior to the time period shown in Map 8.3. Again, Norway stands out as an exception – in most regions, post-pandemic levels remain below pre-pandemic levels.
Several factors help explain the decline in enterprise births and the rise in enterprise deaths after the pandemic. Schito et al. (2023) argue that many companies that went bankrupt in 2023 were already financially vulnerable before the inflationary period, but were kept afloat during the pandemic by extensive government support measures. The subsequent increase in enterprise deaths should therefore be understood partly as a delayed adjustment following the withdrawal of temporary government support measures. Since these schemes were unevenly distributed across sectors (Statistics Denmark et al., n.d.), their regional distribution, and the effects of their termination also varied geographically.
In addition, Russia’s invasion of Ukraine led to a rapid increase in inflation, which directly affected household demand, particularly through rising food and energy prices (OECD, 2025). Although the impact of inflation on bankruptcy rates may initially have been limited, partly because firms were able to pass on higher costs to consumers, this effect varied across sectors and regions, depending on demand. Inflation was also accompanied by higher interest rates, indirectly raising the risk of business failure by reducing firms’ cash flow and increasing financial pressure (Schito et al., 2023).
Overall, recent business demographic trends point to continued challenges for Nordic economies in the post-pandemic period. Enterprise births have declined from pandemic highs, while enterprise deaths have increased, which reflects both the withdrawal of temporary support measures and rising cost pressures associated with geopolitical instability. These developments also affect companies’ willingness to invest. A recent survey among small business owners in Sweden indicates that investment plans are being postponed or cancelled due to uncertainty about future demand, as well as the broader economic outlook (Företagarna et al., 2025). Although enterprise births have not yet fallen back to pre-pandemic levels, the rise in enterprise deaths, combined with renewed geopolitical uncertainty and the risk of escalating trade conflicts, suggests a cautious environment for entrepreneurship across the Nordic Region.
Conclusions
This chapter has traced how the long-standing, rules-based architecture of the international economic order is being reshaped by tariff wars, geopolitical conflicts and pervasive uncertainty. The impact of US tariffs remains uneven across the Nordic Region: regions with a larger manufacturing base face higher direct costs and potential supply-chain disruptions, while the repositioning of Nordic economies within global value chains introduces new competitive dynamics. At the same time, geopolitical instability in the wider European context continues to loom large. Russia’s invasion of Ukraine has exposed the fragility of an international order grounded in the rule of law. Together, these developments reverberate through the Nordic economies, labour markets and policy frameworks.
Against this backdrop, the Nordic Region offers a compelling case study of resilience combined with selective dynamism – understood here as the capacity of regions to adapt to prolonged economic uncertainty. While the urban cores of Finland, Denmark, Sweden, Norway and Iceland continue to lead in terms of GDP per capita, the most notable post-pandemic economic recoveries have occurred in rural and intermediate regions. Many of these areas, historically shaped by heavy industry, forestry, and agrarian economies, are now repositioning themselves through digitalisation and green technology, often in ways that build on existing industrial capabilities. The ongoing reconfiguration of global value chains may create opportunities for traditionally peripheral regions to access new export markets, strengthen supply-chain resilience and attract investment linked to circular economies and sustainable manufacturing.
The recent Nordic experience illustrates that although external shocks have significantly disrupted the traditional international economic order, economic turbulence can also open alternative pathways to growth. The evidence presented in this chapter suggests that urban-centric growth models might no longer be the sole route to prosperity. Instead, a nuanced understanding of regional heterogeneity and place-specific potential is increasingly central to the Nordic economic narrative. In particular, the relatively strong performance of several rural and intermediate regions highlights the importance of adaptive regional economic policies. Such policies need to translate local diversity into coherent, forward-looking strategies that balance the advantages of urban dynamism with the untapped potential of less-urbanised regions, thereby strengthening long-term economic resilience across the Nordic Region.
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