• Sweden edition
 

Swedish GDP growth nears record high: report

Published: 21 Dec 2010 17:00 GMT+01:00
Updated: 21 Dec 2010 17:00 GMT+01:00

The National Institute of Economic Research (Konjunkturinstitutet, KI) estimated that the Swedish economy will grow 5.6 percent this year in its Swedish Economy December 2010 report released on Tuesday.

"The Swedish economy is growing at record speed," division director Peter Svensson said in a statement.

Sweden last witnessed GDP growth above 5.6 percent in 1954 and 1961 at 5.7 percent, 6.8 percent in 1964 and 6.5 percent in 1970.

KI suggests that the Swedish government should invest another 25 billion kronor ($3.66 billion) in unfunded measures in its 2011 budget in addition to the 13 billion kronor already proposed.

"The need to stimulate demand is greatest in the near future when resource utilisation in the economy is low," KI wrote in a statement.

Sweden's economy is growing strongly and at a much higher pace than in many other OECD countries. Domestic demand is rising faster than GDP and is playing an unusually important role in the country's recovery, KI wrote.

High unemployment means that there are spare labour market resources. Consequently, employment can increase without overheating the labour market.

The Swedish economy is in an upward spiral, with rising demand leading to increased output and higher employment, which in turn boosts demand, KI added.

"Although growth will fall off considerably in the period ahead, it will still be strong in the next two years at 3.8 percent in 2011 and 2.9 percent in 2012," wrote Kristian Nilsson, KI's director of forecasting, in a statement.

KI has increased its GDP forecast substantially in line with other forecasts. However, it sees growth falling considerably to 3.8 percent next year and 2.9 percent in 2012.

It also expects employment to grow by an additional 2.5 percent in 2012 compared with 2010, representing 110,000 people, but unemployment is falling slowly, with KI expecting it to reach 7.5 percent in 2012.

KI believes that inflation will fall below Sweden's central bank, the Riksbank's, inflation target of 2 percent in both 2011 and 2012. As such, the Riksbank does not need to raise interest rates as much as it has previous projected.

KI expects the benchmark interest rate, the repo rate, to reach 2 percent at the end of 2011 and 2.75 percent in late 2012 compared with the current 1.25 percent.

"However, we recommend that the bank move a bit slower until next time. Sweden needs a little breathing room in the spring. There are still low inflationary pressures and we have moderate wage increases," KI general director Mats Dillén told news agency TT on Tuesday.

Both Nordea and SEB's chief economists recommend the Riksbank continue to raise interest rates in the spring.

"We think it is right to raise rates. Both households and business sector can cope with higher interest rates. We are getting closer to a normal business cycle and interest rates need to be raised to slow indebtedness," said Annika Winsth at Nordea.

Nordea is even more optimistic than KI about Sweden's unemployment picture, estimating that it will decline to 6.5 percent in 2012.

"We do not share the view that there will be plenty of spare capacity in the economy," said Winsth.

Robert Bergqvist at SEB warned that it is easy to lose perspective when talking about interest rate hikes, that one simply looks at increases and not at what the rate of interest actually is - which at present is very low.

"Given the momentum in the Swedish economy, we believe that it is reasonable that the Riksbank will continue to raise interest rates in the spring," said Bergqvist.

The so-called barometric indicator fell by three points between November and December.

"The indicator is still at a very high level, near the peak of the fall of 2000," KI wrote.

Slightly worsening prospects in the manufacturing industry, commerce and the private service sector contributed to the declining indicator. However, the construction sector continues to point upwards, according to KI.

At the same time, households are slightly less optimistic about the economy than before. Household confidence fell for the third consecutive month by 1.7 points to 20.8, which is still considerably higher than the historical average.

TT/The Local/vt (news@thelocal.se)

Your comments about this article

Today's headlines
American sales squeeze Ericsson profits
Ericsson CEO Hans Vestberg presents the third-quarter earnings report at the company's headquarters in Kista. Photo: Janerik Henriksson/TT

American sales squeeze Ericsson profits

Swedish telecoms equipment maker Ericsson reported a decline in net profit in the third quarter despite an increase in sales, boosted by business in emerging markets. READ  

Stockholm 'sub hunt'
Sweden calls off suspect submarine search
Ships are returning to shore in Sweden. Photo: TT

Sweden calls off suspect submarine search

The core search for a suspected foreign vessel in Swedish waters has been called off. The armed forces said they remained convinced foreign underwater activity had taken place but had not identified an intruder. READ  

Business & Money
US and Japan fuel surge for Volvo trucks
Ed Carbaugh prepares to install parts on a truck engine on an assembly line at Volvo Trucks' powertrain manufacturing facility in Hagerstown, Maryland, March 2014. Photo: Patrick Semansky/AP

US and Japan fuel surge for Volvo trucks

Sweden's Volvo, the world's second-largest maker of trucks, said Friday it saw a spike in profits in the third quarter, boosted by thriving sales in the US and Japanese markets. READ  

Inspectors attacked at rogue doc’s surgery
Cigarettes and beer photo: Shutterstock

Inspectors attacked at rogue doc’s surgery

Inspectors who were sent to shut down a doctor’s surgery in Gothenburg were physically attacked and fled the premises to get help from the police. READ  

Interview
'Too many concerts feel the same'
Sofar hosts secret gigs in Swedish apartments. Photo: Sofar

'Too many concerts feel the same'

Kattis Bjork founded Stockholm's secret gig scene - Sofar - a year ago. The Local caught up with her as she prepared to celebrate the project's anniversary this weekend and revealed the concept will spread to other Swedish cities in 2015. READ  

Police turn Swede’s vodka into water
A Swede loads a car with alcohol in northern Germany. File photo: Drago Prvulovic/TT

Police turn Swede’s vodka into water

Swedish police say they will pay a man 16,000 kronor ($2,200) in damages after much of the alcohol they confiscated from him was stolen, while many of the bottles they returned were filled with water. READ  

Diplomacy
US to get first female ambassador in Sweden
File photo: Athena Center for Leadership Studies

US to get first female ambassador in Sweden

The United States Embassy in Stockholm is set to get its first female ambassador after the White House announced it was nominating the Iranian-American ex-investment banker Azita Raji to take over from Mark Brzezinski. READ  

Neo-Nazi attacks
Neo-Nazis cleared of knife attack on Nigerian
Police intervene after neo-Nazis attack an anti-Nazi rally in Kärrtorp, December 2013. Photo: Hampus Andersson/TT

Neo-Nazis cleared of knife attack on Nigerian

A Stockholm court has cleared three neo-Nazis of stabbing a Nigerian man in an unprovoked attack. But two of the men will face jail after they were convicted of racial agitation at a riot. READ  

Julian Assange
Assange court ruling expected on Monday
Julian Assange at Ecuador's embassy in the UK. Photo: Anthony Devlin

Assange court ruling expected on Monday

WikiLeaks founder Julian Assange can expect the next court ruling on his case to take place on Monday October 27th in Stockholm. READ  

Politics
Sweden to get EU 'Christmas present'
Sweden's Prime Minister Stefan Löfven at an EU summit in Brussels this week. Photo: TT

Sweden to get EU 'Christmas present'

Sweden is set to get 1.2 billion kronor ($168 million) back from the EU on December 1st, according to leaked EU documents which suggest that other European countries will have to make large top-up payments this year. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Lifestyle
What's On in Sweden: October 24th - 31st
Gallery
People-watching: October 22nd
Gallery
In Pictures: Prince Carl Philip and Sofia Hellqvist
Lifestyle
Eight things to love about renting a Swedish apartment
National
Vasa ship cannon blasted in Sweden
Blog updates

24 October

Editor’s blog, October 24th (The Local Sweden) »

"Hi readers, Get ready to read our weekly digest of Swedish news in less than 60 seconds. The..." READ »

 

24 October

Is darkness weather? (Blogweiser) »

"I try very hard not to talk about the weather. This has come after a decade..." READ »

 
 
 
National
Sub hunt: Day-by-day
National
Sub hunt: Stockholm islanders share their fears with The Local
Sponsored Article
The best options for oversea transfers
National
Get 20% off unique Swedish homeware
National
Dentist gives free care to Roma beggars
Business & Money
Get your own office in Gothenburg or Stockholm - free for a day
Gallery
Property of the week: Malmö
Gallery
PHOTOS: 'Foreign activity' in Swedish waters
Gallery
People-watching: October 19th
TT
Society
QUIZ: How good is your Swedish?
Lifestyle
What's on in Sweden: October 17th - 24th
Society
The nudity... and nine other things expat men notice in Sweden
Gallery
People-watching: October 15th
Gallery
Your views: Should outdoor smoking be banned in Sweden?
Business & Money
Sweden has 'large hole' in finances
Sponsored Article
Introducing... Finding a job in Stockholm
Society
Monster salmon caught in northern Sweden
Gallery
Property of the week: Lorensberg
National
Scandinavia's child bride
National
Ebola crisis: How is Sweden preparing?
Business & Money
How Sweden is becoming a cashless society
Gallery
Stockholm Burlesque Festival 2014
National
How a little red horse became a symbol for Sweden
Gallery
People-watching: October 12th
Business & Money
The hottest start-ups from southern Sweden
National
What's on in Sweden: October 10th - 17th
National
Stockholm is 'best' region for well-being
Gallery
People-watching: October 8th
National
Five facts to know about Patrick Modiano
Society
My Swedish Career: A French fashionista in Sweden
Society
Swede's anti-bully Facebook tale goes viral
Society
Have you seen Sweden's viral subway cancer campaign?
National
Isis: Swedes linked to Turkish prisoner swap
National
Should Swedes be banned from buying sex abroad?
Gallery
Fredrik Reinfeldt's leaving presents
National
Five Swedish TV shows you shouldn't miss
Gallery
A tool belt, a casserole, and a book. Fredrik Reinfeldt's parliament gifts
TT
Lifestyle
Top five winter festivals in Sweden
TT
National
Sami reindeer herders win mine reprieve
Gallery
Property of the Week: Gamla Enskede
Sponsored Article
How to catch the first lobster of the year
Team SCA
Sponsored Article
All-female SCA team takes off on Volvo Ocean Race
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

979
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
www.swedishdowntown.com
PSD Media
PSD Media is marketing company that offers innovative solutions for online retailers. We provide modern solutions that help increase traffic and raise conversion. Visit our site at:
http://psdmedia.se
If you want to drink, that’s your business.
If you want to stop, we can help.

Learn more about English-language Alcoholics Anonymous in Sweden. No dues. No fees. Confidentiality assured.
AA-EUROPE.ORG/SWEDEN