Currency woes hit Swedish wallets

Currency woes hit Swedish wallets
The recent devaluation of the Swedish krona has made the nation poorer. If the currency's 15 percent decline against the euro stands there is a risk of Sweden dropping down the OECD wealth league table, analysts predict.

Aside from the fall in the currency, the decline in Swedish productivity will also have a bearing on the country’s standing in the wealth league, according to Hans-Olof Hagén at Statistics Sweden (SCB).

“But it won’t be anything dramatic. We could fall a couple of places,” he said.

Analysts argue however that Sweden’s wealth has not declined at the same rate as its currency, which has dropped 15 percent against both the US dollar and the euro since the financial crisis broke out in the autumn.

“It will be a couple of percent lower, but no more,” according to Hagén.

Stefan Lundgren, an economist at SNS, an educational association, makes the same assessment as Hagén.

“Now the krona has fallen by 15 percent during the autumn. If it stabilizes at this level then Swedish GDP per capita will decline somewhat in comparison with the rest of Europe,” Lundgren said.

Both Lundgren and Hagén see the decline in the krona as a temporary phenomenon. They are expecting a correction when the global finance markets calm down.

“The US dollar has been inflated by investors moving into US government bonds. When this changes the trend will go in the right direction again. Many importers share this view and have resisted raising prices for fear of upsetting their customers,” Hagén said.

That importers are absorbing much of the currency decline is the main reason that Sweden’s fall down the welfare league will not be as severe.

“The decisive factor is how import prices impact consumers. With current demand and competition there is little danger. They have already started the Christmas sales, observed Halgén.