Sweden ‘protected from economic slump’

Investments, consumption and exports are set to protect the Swedish economy from next year's expected economic slump, according to a report presented by insurer Folksam.

A global economic slow-down that is predicted to be the knock-on effect of a slump in the American economy, will have limited consequences in Sweden. Europe and Japan are expected to bear a share of the burden but it is the USA that may be hardest hit. If property prices drop too low, the USA could be hit by recession and a financial crisis.

The market has already cooled down, according to Folksam economist Maria Ljungqvist-Marti. She also adds that property prices generally have a greater effect on consumption patterns than stock exchange developments.

Folksam economist Tor Borg is concerned that the dollar may become even weaker, losing a further ten percent on other currencies in the next quarter. “When it comes to the Swedish krona, things are moving in the other direction”, says Borg, pointing to the country’s record high current account balance and economic growth.

He also mentions strong public finances, a stock exchange that has grown by 175 per cent since reaching a record low in March 2003, as well as rising foreign interest in Swedish companies.

“That is why we estimate that the krona will be worth about 5 per cent more in a year’s time.”