The Swedish Associations of Local Authorities and Regions’ report predicts continued high global growth and continued profitability for Swedish companies. Inflation will remain low and the state and local authority sectors will continue to enjoy strong finances.
The economists behind the report say that the number of people in work is likely to grow, while open unemployment will fall. This will be to the advantage of local authorities, which will see increasing tax revenues.
The economists expect GDP to grow 3.6 percent this year, before levelling off in 2008-10. Households’ disposable income will rise significantly this year due to increased employment rates and the government’s tax cuts.
The number of people in work will increase by 100,000 this year. In 2008 and 2009 employment will also increase, but at a slower rate. Wage increases across the employment market will be around 4 percent between 2007 and 2010.
The increases will not in themselves threaten Sweden’s ability to meet its inflation target, but other factors are expected to put pressure on inflation, causing the Riksbank to raise interest rates both this year and next.