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ECONOMY

Sweden weighed down by weak exports

Sweden posted the fourth straight decline in foreign trade in February, with both exports and imports posting steep falls from 2008 and set to weigh on the already-dismal outlook for the country's first quarter GDP.

Sweden weighed down by weak exports

Swedish exporters took a heavy hit in February despite some help from a weak krona as a worldwide financial crisis ate into demand for goods from the Nordic country.

Sweden’s trade surplus reached 9.5 billion kronor ($1.2 billion) in February from a revised 6.7 billion in January, the statistics office said. That is sharply lower than the 15.5 billion kronor which the export-dependent economy posted in the same month a year ago.

“Some of the drop is due to the 2008 leap year but the collapse in foreign demand of course pulls exports downwards,” said Johanna Jeansson, an analyst at Nordea.

The data showed exports had fallen 24 percent to 80.3 billion crowns from the previous year, although they were up a touch from a revised 77.2 billion kronor in January. Imports were also down 22 percent from a year ago at 70.8 billion kronor.

Handelsbanken said in a research note exports adjusted for price changes had fallen by almost 30 percent year-on-year during the first two months of 2009 and would have a substantial impact on first quarter GDP.

“A lower number of working days explain parts of the falls in exports and imports compared to 2008. Still, the decline in exports in Q1 will be record large, even assuming some recovery in March,” it said.

The bank said weak trade would hit first quarter GDP with a negative contribution of -4 percent, much larger than the -1.6 percent in the fourth quarter, adding that GDP for the first quarter would likely be just as weak as in the fourth quarter.

Sweden’s GDP contracted at an annual pace of 4.9 percent in the fourth quarter as the financial crisis pushed the economy deeper into recession. The economy contracted 2.4 percent on a quarter-on-quarter basis.

However, analysts also said a weak krona had to some extent given Swedish exporters support against a backdrop of collapsing world trade.

Olle Holmgren, an analyst at SEB, said the figures were weak but on the margin slightly better than expected.

“But it is interesting that imports fall as much as exports, so that

the trade balance held up. The weak crown seems to help a little in that

respect,” he said.

ECONOMY

‘Tougher times’: Sweden’s economy to slow next year

Consumers in Sweden are set to crimp spending over the rest of the year, pushing the country into an economic slowdown, Sweden's official economic forecaster has warned in its latest prognosis.

'Tougher times': Sweden's economy to slow next year

A combination of record high energy prices over the winter, rising interest rates, and inflation at around 10 percent, is set to hit household spending power over the autumn and winter, leading to lower sales for businesses and dragging economic growth down to just 0.5 percent next year. This is down from the 1.2 percent the institute had forecast for 2023 in its spring forecast. 

“I don’t want to be alarmist,” Ylva Hedén Westerdahl, forecasting head at the Swedish National Institute of Economic Research, said at a press conference announcing the new forecast. “We don’t expect the sort of economic slowdown that we saw during the financial crisis or the pandemic, where unemployment rose much more. But having said that, people who don’t have a job will find it tougher to enter the labour market.” 

She said that a shortage of gas in Europe over the winter, will push electricity prices in Sweden to twice the levels seen last winter, while the core interest rate set by Sweden’s Riksbank is set to rise to two percent. 

As a result, Sweden’s unemployment rate will rise slightly to 7.8 percent next year, from 7.7 percent in 2022, which is 0.3 percentage points higher than the institute had previously forecast. 

On the plus side, Westerdahl said that she expected the Riksbank’s increases in interest rates this year and next year would succeed in getting inflation rates in Sweden under control. 

“We expect a steep decline in inflation which is going to return to below two percent by the end of 2023,” she said. “That depends on whether electricity prices fall after the winter, but even other prices are not going to rise as quickly.” 

After the press conference, Sweden’s finance minister, Mikael Damberg, said he broadly agreed with the prognosis. 

“I’ve said previously that we are on the way into tougher times, and that is what the institute confirms,” he told Sweden’s state broadcaster SVT. “There’s somewhat higher growth this year, at the same time as fairly high inflation which will hit many households and make it tougher to live.”

Damberg called on Sweden’s political parties to avoid making high-spending promises in the election campaign, warning that these risked driving up inflation. 

“What’s important in this situation is that we don’t get irresponsible when it comes to economic policy,” he said. “Because when parties make promises left, right and centre, it risks driving up inflation and interest rates even more, so Swedish households have an even tougher time. Right now, it’s important to prioritise.” 

 The call 

Sverige är på väg mot lågkonjunktur enligt Konjunkturinstitutets (KI) senaste prognos. Enligt finansminster Mikael Damberg (S) är det därför viktigt att Sverige sköter sin ekonomi ansvarsfullt och vågar prioritera.

– Jag tror att alla partier behöver vara lite återhållsamma och inte lova för mycket, säger han.

Mikael Damberg tycker att KI tecknar en realistisk bild av Sveriges ekonomiska verklighet.

– Jag har sagt tidigare att vi går mot tuffare tider och det är väl det som KI bekräftar. Något högre tillväxt i år men sämre tillväxtförutsättningar nästa år samt fortsatt ganska hög inflation som slår mot många hushåll och gör det tuffare att leva, säger han.

Och vad vill regeringen göra åt det?

– Det är viktigt att vi i det här läget inte är ansvarslösa i den ekonomiska politiken. För när partier lovar vitt och brett till allt riskerar vi att driva upp inflationen, öka räntan ytterligare och svenska hushåll får det svårare. Nu måste man våga prioritera.

Se intervjun med Damberg om konjunkturläget klippet ovan.

“Electricity prices are going to be twice as high as last winter,” said 

Elpriserna kommer att bli dubbelt så höga som förra vintern, säger Ylva Hedén Westerdahl, chef för Konjunkturinstitutets prognosavdelning, på en pressträff.
Den lågkonjunktur som KI ser framför sig kallar hon trots det för en mjuklandning. Den handlar främst om att människor kommer att ha mindre pengar att konsumera.

“Brist på gas i Europa gör att energipriserna ser ut att bli rekordhöga under vintern”, skriver KI, och ser att inflationen kommer att närma sig 10 procent.

Deras prognos för styrräntan är att den ligger på 2 procent vid årsslutet, vilket gör att inflationen faller tillbaka snabbt under nästa år och Riksbanken låter då räntan ligga still.

KI tillägger att de offentliga finanserna är fortsatt starka och de bedömer att det finns ett budgetutrymme på runt 120 miljarder kronor för de kommande fyra åren.

Vad gäller BNP spår KI en blygsam tillväxt på 0,5 procent nästa år – en nedskrivning från tidigare 1,2 procent.

Prognosen för arbetslösheten under 2023 är 7,8 procent, 0,3 procentenheter högre än tidigare prognos.

Fredrik Fahlman/TT
Johanna Ekström/TT

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