• Sweden edition
 
Sweden slashes 2012 growth forecast

Sweden slashes 2012 growth forecast

Published: 16 Apr 2012 15:39 GMT+02:00
Updated: 16 Apr 2012 15:39 GMT+02:00

The Swedish economy is set for a major slowdown in 2012, according the spring budget presented on Monday by finance minister Anders Borg, who warned for the "downside risks" amid the continued economic uncertainty.

Borg told reporters at a press conference that the Swedish economy had stabilized somewhat in recent months and that he expected a degree of normalization during 2012.

"But the situation is still uncertain. It's a bit like the weather in April," he told reporters.

The government slashed its 2012 growth forecast in the spring budget from 1.3 percent to a mere 0.4 percent due to "problems in the public finances of several euro[zone] countries".

Despite the much-reduced growth forecast, the finance ministry warned further that "there is still a risk of poorer growth".

As a result, Borg explained that the government planned to emphasize stronger safety margins ahead of new reforms.

"The government continues to put jobs and welfare first. Apart from managing the direct consequences of the debt crisis, the government needs to tackle the challenges facing Sweden," Borg said in a statement.

"This requires measures to achieve permanently higher employment and lower equilibrium unemployment, more robust welfare, better conditions for business and a more sustainable climate."

While the Swedish economy is expected to grow at a rather meager rate in 2012, the government expects economic growth to pick up considerably the following year, with GDP growth expected to climb to 3.3 percent in 2013 before reaching a 3.7 percent annual growth rate in 2014, just in time for the next parliamentary election.

Unemployment, meanwhile, is expected to peak at 7.8 percent on 2012, before dropping slightly to 7.7 percent in 2013 and 6.9 percent in 2014.

"Considering what had been feared, this is a little sigh of relief," said Borg.

But the forecast was criticized by some analysts as being too optimistic.

"I think it's an appropriate forecast for 2012, but a strange forecast for 2013. It seems inappropriately high," Cecilia Hermansson, the head economist at Swedbank, told TT.

"There are big problems in Europe which aren't going to be fixed in a year. There are few other forecasters that have such strong growth."

Hermansson also questioned Borg's unemployment forecast arguing it was likely to remain high for "several years" and that the government should have devoted more money to infrastructure and employment programmes.

During a parliamentary debate following the unveiling of the budget, Borg answered criticism that the government's budget did too little.

"It would be careless in this situation to have a discussion about spending cuts and tax hikes," he said.

"We can't be sure that the crisis won't come back. We should be careful, we should create safety margins."

But Social Democrat MP Fredrik Olovsson emphasized that employment issues are what matter to voters.

"The spring budget doesn't provide much hope. The government's policies are going to lead to persistent high unemployment," he said, adding that around 400,000 Swedes are out of work.

Meanwhile, the Green Party's Per Bolund attacked the government for failing to tackle youth unemployment.

"Instead of a finance minister, we have a statistics minister who seems more interested in explaining away unemployment than doing something about it," he said.

TT/The Local/dl

twitter.com/thelocalsweden

Don't miss...X
Left Right

Your comments about this article

16:31 April 16, 2012 by Svensksmith
Borg looks like he's really enjoying himself in that picture... Where's his hands?
17:12 April 16, 2012 by libertarianism
Wonder why he doesn't wear giant black glasses like all the other Clark Kentssons. Maybe he's more of a Harry Potter kind of guy? Re 1, holding his wand?
18:28 April 16, 2012 by Carbarrister
He may need to sell his earing if things get worth.
18:40 April 16, 2012 by kirub
Senor Borg, what's with the grey hair?
19:31 April 16, 2012 by PeterGr
Not entirely sure with his projections, but it certainly seems he got spooked by the trouble still brewing in the Eurozone and the PIGS in particular. He may be thinking that money should be put aside for additional rescue packages to other EU member states...
19:37 April 16, 2012 by libertarianism
Oh, thank you #3. That made me laugh. Poor Borg. I hope I never end up in a TL story. The things people say... ;)
20:24 April 16, 2012 by viennacalling
I would like the ECB to release all the data on the 1 trillion EURO Loans given to All the EU Banks . The Top 4 British Banks have Confessed to taking Over 50 Billion Euro, How Much did the Swedish Banks Take and convert to Kroner ???
07:51 April 17, 2012 by Happy Expat
400,000 Swedes are out of work but how many more would it be if they published the figure for ALL unemployed. We've already had Rumpfelt telling us that the "others" don't really count,
12:53 April 17, 2012 by jasonpat
This is well growth by the swedon this hard time.
15:13 April 17, 2012 by minzi
Actually I dont understand that why one government which owns thinktanks cannot figure out the simple way to solve the current financial problems and unemployment probles and so on which for the ordinary people like me have got some thoughts to tackle with. But without the goverment determination to solve the problems, we cannot expect the problems will be worked out by themselves. So why doesnt the goverment actually do something?
16:55 April 18, 2012 by Thebinary1
@minzi: As long as problems exist, governments remain relevant and politicians get to have and keeps their jobs. As soon as problems are solved, governments and politicians become irrelevant and therefore jobless. It is therefore not in the government's interest to solve problems. This is why when they need your vote, they suggest really good policies on solving problems, but once in power they consistently fail to deliver.
Today's headlines
Sweden scraps 'new start zones' after EU input
Integration Minister Erik Ullenhag visits a school in Tensta, one of the neighbourhoods mentioned when he and his colleagues first floated the new start zone proposal. File: TT

Sweden scraps 'new start zones' after EU input

Sweden has abandoned a plan to ease taxes for small companies in blighted areas after the European Commission challenged its legality. READ () »

'Easter eggs an invitation to spread germs'
A typical Swedish Easter egg. Photo: Jessica Gow/TT

'Easter eggs an invitation to spread germs'

A Swedish microbiologist has warned that traditional Swedish Easter eggs laden with candy are an open invitation to the spread of bacteria and viruses. "Is this really a good idea?" he asked. READ () »

Jammed truck snarls Stockholm rush hour
Photo: Anders Wiklund/TT

Jammed truck snarls Stockholm rush hour

PICTURES: A truck got wedged inside a tunnel in central Stockholm on Thursday, with authorities concerned the accident may have damaged cables in the tunnel's ceiling. READ () »

Kids in Victorian garb mark Swedish Easter
A Swedish Easter witch holding daffodils. File photo: TT

Kids in Victorian garb mark Swedish Easter

In India, I'd notice Easter only from the traffic jam outside the churches, but here witches, egg hunts, and feathers mark the Christian holiday. The Local's Deepti Vashisht brings you the various shades of Swedish Easter. READ () »

Swedish MP ordered chemtrail probe
Chemtrails?: Shutterstock.

Swedish MP ordered chemtrail probe

A Swedish MP who launched an official government investigation into the existence of chemtrails tells The Local why he thinks Swedes deserve the truth, even if it may leave some conspiracy theorists unsatisfied. READ () »

PM pleads ignorance of Vattenfall's Nuon bid
Fredrik Reinfeldt answers the constitutional affairs committee's questions. Photo: TT

PM pleads ignorance of Vattenfall's Nuon bid

Sweden's prime minister on Thursday said Vattenfall itself, not its owners the Swedish state, had responsibility for the loss-making Nuon deal. READ () »

'Kockums submarine raid may be illegal': lawyer
Photo: TT

'Kockums submarine raid may be illegal': lawyer

A Swedish lawyer says the Swedish military may have broken the law when it raided the Malmö premises of German defence giant Thyssen Krupp. READ () »

Good weather could blight Easter traffic
Easter traffic two years ago on the E4 motorway. File: Jessica Gow/TT

Good weather could blight Easter traffic

Traffic experts have cautioned Swedes heading to the countryside for what should be a sunny Easter, warning that the most serious accidents often take place when the weather is clement. READ () »

Saab offers Gripen lease to Malaysia
Jas Gripen jets in flight. File photo: TT

Saab offers Gripen lease to Malaysia

Swedish defence giant Saab has offered to rent out fighter jets to Malaysia. READ () »

What's On in Sweden

What's On in Sweden

Check out what's happening with The Local's guide to the main attractions and events in Stockholm, Gothenburg and Malmö - in association with DoToday. READ () »

RECEIVE OUR NEWSLETTER AND ALERTS
Society
Swedish supermarket Ica pulls contested Easter commercial off air
Kungahuset
Society
Swedish royals set baptism date for princess
finest.se
Gallery
People-watching April 16
Politics
Who's the prime minister's heir?
Alfie Atkins
Society
Are children's books the key to families integrating in Sweden?
National
'Sweden Dem protests cater to party's martyr image'
National
'Swedish research grants were fantastic, but now it's like Australia'
Society
Only in Sweden: The ten problems you'd never encounter elsewhere
National
Swedes stopped to take my picture, but didn't look me in the eyes
Business & Money
A swipe of the hand replaced cash and cards in Lund
YouTube
Features
Video: Oliver Gee finds out how to embrace The Swedish Hug
TT
National
Abba duo hints at reunion
Advertisement:
Private
National
Flash mobs hug it out across Sweden
Finest.se
Gallery
People-watching April 11-13
TT
Politics
Swedes to give six-hour workday a go
TT
Society
Aussie choir member wows Abba in Sweden
YouTube
Society
Stockholm magic a surprise YouTube hit
Fastighetsbyrån
Society
Gallery: The Local's Property of the Week
Private
Society
Swedes find 200-year-old gravestone in living room
Stockholm School of Economics
Sponsored Article
Why a bachelor's degree is no longer enough
Deepti Vashisht
Features
Deepti Vashisht dissects the magic of Sweden's personal ID number
Shutterstock
Society
Ten signs you've been in Sweden too long
Society
Jimi Fritze heard every word when doctors discussed taking his organs
Society
A Swedish farmer explains why the new bestiality ban is 'pointless'
ESL
Sponsored Article
Learning Swedish the easy way
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 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

Blog Update: The Diplomatic Dispatch

28 October 15:16

The Green Growth Group Summit »

"Today on the 28 October in Brussels, a large group of key EU Ministers and business people, including UK Secretary of State for Energy and Climate Change Edward Davey, and Swedish Environment Minister Lena Ek, will meet to discuss green growth. They all have a stake in resolving a challenge which, although it is crucial..." READ »

760
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