High wage settlements in Nordic countriesthreaten to cut exports and reduce the international
competitiveness of their industries, the Organisation for
Economic Cooperation and Development (OECD) said.
    In Denmark, the OECD said wage settlements concluded in
early 1987 were likely to contribute to a marked deterioration
in competitiveness. Sweden's competitive position was also seen
at risk from accelerating wages.
    The OECD predicted that domestic demand would come under
pressure from tight fiscal policy in Denmark, as well as
Norway, Sweden and Finland.
    Overall economic growth will vary in the different
countries between 1986 and 1988, the OECD semi-annual report
said.
    After a strong rise of 7.8 pct in 1986, total domestic
demand in Norway was seen falling by 1.5 pct in 1987 and one
pct the following year. Denmark was also expected to see a
slump in domestic demand. The report said growth in Gross
Domestic Product (GDP) was likely to speed up slightly in
Sweden and Finland in 1987 and 1988, while declining in Denmark
and Norway.
    Iceland needs to try harder to implement its new economic
strategy if any more progress is to be made towards sustained
and balanced non-inflationary growth, the OECD said.
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