Borg: growth forecast under revision

Sweden's finance minister Anders Borg on Thursday warned that the government will need to revise down its strong economic growth expectations for 2012 due to the global financial market turbulence.

• Borg drops resistance to EU fiscal stimulus (15 May 13)
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• 'Weak, slow and difficult' economy ahead: Borg (15 Apr 13)

"It is obvious that we will carry out a significant downward revision of the forecast we provided in the spring" for next year due to the "current turbulence", Borg said at a press conference.

On April 13th, Borg had said that Sweden's gross domestic product was expected to grow 4.6 percent this year and by 3.8 percent in 2012.

On Thursday, the finance minister said Sweden's centre-right government did "not yet have all the elements at hand" to estimate the exact impact the current crisis would have on the country's GDP trajectory.

The turmoil on global stock markets amid growing concerns of a new looming financial crisis would also have "consequences for public finances" in Sweden, one of Europe's strongest economies, Borg said.

He added that his previous forecast of a nearly 2 percent budget surplus in 2012 would likely be revised down as well.

He stressed however that Sweden remained "well-prepared" to face the global turbulence, pointing out that the country "has long experience in handling
this kind of problem".

"It is becoming increasingly probable that we will be close to balancing (the budget) or even a surplus this year and that we have good possibilities of securing strong public finances," Borg said.

"We will have the strongest public finances in the EU system, or one of the strongest, next year as well, just not quite as strong as we previously thought," he added.

And according to prime minister Fredik Reinfeldt the latest financial crisis does not mean raised taxes or cuts.

“As it stands right now, we are within safety margins and we can tell the Swedish people that in Sweden, unlike in other countries, there are no raised taxes and no cuts to the budget around the corner,” Reinfeldt said at the press conference.

The government is set to present its 2012 budget next month.