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Summary:
The five Nordic countries—Denmark, Finland, Iceland,
Norway, and Sweden—share deep historical, linguistic, and
cultural ties and many political and economic similarities.
They are all stable democracies with parliamentary systems
of government and prosperous market economies with
relatively high standards of living. With a collective
population of nearly 28 million people, the Nordic countries
have a combined gross domestic product (GDP) of roughly
$1.9 trillion (see Figure 1). They have extensive social
welfare systems and relatively high tax rates but are
considered to be innovative, business-friendly countries.
The Nordics generally rank high on global competitiveness
and innovation indexes. Foreign trade plays a key role in
their economies. They also enjoy substantial natural
resources. Norway in particular benefits from vast North
Sea oil and natural gas deposits.
The Nordic countries were affected economically by the
COVID-19 pandemic and, since 2022, by Russia’s war
against Ukraine. GDP contracted in all five Nordic
countries in 2020 due to the pandemic, rebounded in 2021,
but slowed in 2022 and 2023 amid the conflict in Ukraine,
elevated energy prices, high inflation, and rising interest
rates. GDP growth is expected to remain modest in all five
Nordic countries in 2024 (between roughly 1% and 2%) as
inflation eases and interest rates stabilize. Aging
populations and other demographic and societal changes
raise questions about the long-term sustainability of the
Nordics’ social welfare systems.
Migration policy is a key political issue in the Nordics. The
2015-2016 spike in refugees and migrants in Denmark,
Finland, Norway, and Sweden—mostly from the Middle
East, Afghanistan, and Africa—strained education, housing,
and welfare systems. Most Nordic governments introduced
tougher asylum policies and curtailed some welfare
benefits. The refugee and migrant waves also stirred
debates about identity, integration, and security (in relation
to both terrorism and crime). Refugees from Ukraine,
however, generally have been welcomed by Nordic
governments and societies.
Over the past decade, concerns related to migration,
globalization, and other political and economic challenges
have generated voter distrust of established center-right and
center-left political parties throughout the Nordics and
fueled the rise of populist parties. Most anti-establishment,
populist parties in the Nordics are on the right or far right
and hold nationalist and anti-immigrant views. In Sweden, a
far-right party has provided parliamentary support for a
center-right government since October 2022 (in exchange
for tightening immigration, asylum, and criminal justice
policies). Following Finland’s April 2023 election, a farright party with nationalist, anti-immigrant views joined a
coalition government led by a center-right party.
Further Information:
This In Focus was first published in September 2018 and it has been updated several times over the years. The latest update was published in April 2024. All updates can be checked on the Primary Source link provided below.
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