US downturn ‘won’t stop Swedish growth’

Sweden's period of high economic growth is set to continue, the Confederation of Swedish Enterprise (Svenskt Näringsliv - SN) has predicted. Sweden's economy will continue to grow, despite a serious downturn in the US and lower growth in export industries, it said in a report.

Higher rates of employment and investment will come as a result of the growth in the economy. Large groups currently outside the job market in Sweden are set to find their way back in, the report said.

GDP growth will be 3.2 percent this year, 2.8 percent next year and 2.9 percent in 2009, the report predicts. The official unemployment rate will be 4.5 percent this year, before falling to 3.9 percent next year and 3.5 percent in 2009.

Inflation will average 2.1 percent this year, rising to 2.5 percent in 2008, falling back to 2.3 percent in 2009, according to the confederation’s economists.

Stefan Fölster, chief economist at SN, said he was pessimistic about US growth, predicting the country could come close to recession.

“For Sweden this means that we could lose some exports to the US, but increases in exports to other parts of the world compensate for this, so the effects will be limited.”

Fölster said consumption in Sweden would be strong.

“This won’t feel like a slowdown for most Swedes, despite growth being a bit lower,” he said.