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Swedish companies still struggling for funding

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15:51 CEST+02:00
Swedish companies are still finding it hard to get funding on the financial markets, despite signs of economic recovery, the deputy governor of Sweden's central bank, the Riksbank has said.

Karolina Ekholm made the comments in a speech on Friday in Stockholm.

"Swedish companies have gradually found it easier to find funding on the international capital markets. But the funding situation is still strained," she said, pointing out that interest rates offered to Swedish companies are high in comparison to interest rates for government securities.

Ekholm also argued that corporate demand for export guarantees is currently much higher than in the past.

According to Ekholm, who took office in January this year, the economy is showing signs of recovery. She said world trade had now begun to stabilize "following the collapse at the beginning of the year".

She pointed out that the forecast for Sweden's gross domestic product (GDP) growth has been revised upwards somewhat, after falling for five consecutive quarters.

"Furthermore, indicators for development in the third quarter, such as the purchasing managers' index and the Economic Tendency Survey, point to the recovery coming slightly sooner than we previously believed," she says in Friday's speech.

"We have therefore revised our forecast for growth in 2009 upwards slightly. But the recovery will begin from a very low level. Sweden's GDP is now expected to fall by 4.9% this year compared to last year. This is the largest decline in Swedish GDP in an individual year since 1940."

The unemployment situation is expected to be gloomy for some time to come. "This is because the labour market can not improve as long as the companies have unutilised resources and still need to reduce their workforces."

Ekholm voted at the last monetary policy meeting in July that the repo rate should not be cut beyond 0.25%.

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