Swedes more confident about the economy

Confidence in Sweden’s economy rose in March, as more Swedes perceived a strengthening of the economy since February.

The Economic Tendency Indicator, published monthly by the National Institute of Economic Research (KI), reached 103.2 for March, an upswing of 3.5 points to the February reading of 99.6.

“This increase indicates that the situation in the Swedish economy has strengthened from around normal to somewhat stronger than normal,” said KI in a statement.

A boost in confidence was recorded in all sectors of the economy except retail, which registered a marginal decrease in comparison to February.

Overall, the KI’s report reflects mixed feelings about the state of the economy. While the Consumer Confidence Indicator rose 0.9 points to 2.5 in March, the reading is still slightly below average.

Sentiment from business was a bit more encouraging, with employment rising, although at a rate more restrained than a few months ago.

KI also forecasts a continued slowdown in the Swedish economy, with GDP growth expected to reach 2.5 percent in 2008 and 2.6 percent in 2009.

Employment growth is expected to weaken as well, with the economy expected to add only 20,000 more jobs in 2008 and 2009, half of which will be in the public sector.

Joblessness fell toward the end of 2007 to 5.9 percent and is expected to stabilize at this level from this year and next, writes KI.

KI also expects the Riksbank to lower Sweden’s main interest rate in two steps to 3.75 percent in the second half of 2008.