Confidence in Sweden’s economy plummets

Confidence in Sweden's economy plummets
Swedish consumer confidence is at its lowest for over 15 years, a new report from the National Institute of Economic Research (KI) shows.

The institute has cut its GDP forecast for 2009 to “a good bit under 2 percent.”

The Consumer Confidence Indicator (CCI) fell to -18.2 in July, from -10.2 in June. Households are pessimistic about both their personal finances and the development of the Swedish economy as a whole.

The Micro Index, which measures consumer confidence in personal finances, fell substantially between June and July and consequently it at levels well below the historic average. 21 percent of households held that their personal finances have deteriorated in the past year, compared with 16 percent three months ago.

“We had expected households to be more concerned over the situation, but confidence has declined more than we thought,” said Torbjörn Isaksson at Nordea to news agency TT.

The Macro Index, which measures consumer confidence in the Swedish economy, continued its decline in July and is at its lowest level for 15 years. 57 percent of households held the opinion that the Swedish economy has deteriorated over the last 12 months, up from 43 percent in June.

The figures indicate a clear cooling off of the Swedish economy.

“The question is just how deep this dip in growth will be,” Isaksson said.

KI has cut its growth forecast for 2009 as a result of the new survey.

“Our June forecast indicated 2 percent growth for 2009, we will now have to cut the growth forecast to a good bit under 2 percent,” said Urban Brusewitz at KI.

Sentiment in the Swedish economy became gloomier in nearly all sectors of the economy in July. KI’s Economic Tendency Indicator, which measures business and consumer confidence, declined from 93.3 in June to 89 in July.

“We can now see clear indications that the economy has weakened further,” said Roger Knutsen at KI to TT.

GDP figures for the second quarter are expected on Friday.

“We forecast a year-on-year GDP growth of 1.7 percent for the second quarter and this is relatively low compared to other analysts. This indicator strengthens the overall picture that business activity has eased off,” said Torbjörn Isaksson at Nordea.