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Swedish economy over the worst: report

TT/Paul O'Mahony · 18 Dec 2009, 11:09

Published: 18 Dec 2009 11:09 GMT+01:00

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Higher exports and rising consumption are expected to contribute to turning a 4.4 percent drop in GDP this year into a 2.7 percent increase in 2010, rising to growth of 3.3 percent in 2011.

"We've had two quarters in which GDP has increased and we are now predicting higher growth than we had previously anticipated; a fairly substantial upward revision," NIER director-general Mats Dillén told the TT news agency.

According to an NIER statement, the economy has passed its low point largely because of expansionary fiscal and monetary policies, including tax cuts and low interest rates. Another positive factor is that world trade is recovering, entailing increased exports, the institute said.

The Swedish economy will have fully shaken off the effects of the financial crisis by 2014, the institute believes.

Unemployment is expected to remain high for the foreseeable future, rising from 8.5 percent in 2009 to 10.1 percent next year and 10.4 percent in 2011.

"Labour market developments are also better than expected and will not reach the levels we had feared, but we will still see growing unemployment for a while more," said Dillén.

Story continues below…

The institute declined to level any criticism at the Riksbank over its assessment that interest rates will remain at their current low levels until autumn next year, despite market predictions of an earlier rate hike.

"When it comes to the timing of interest rate increases, we and the Riksbank are more or less in agreement," said Dillén.

TT/Paul O'Mahony (news@thelocal.se)

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Your comments about this article

12:44 December 18, 2009 by 2394040
Tax cuts and low interest rates. That was going on here in the USA before the economic crash. Didn't solve anything here. And over the long haul, won't solve anything anywhere.
13:08 December 18, 2009 by bettan1

The leaders of every country on this entire planet are in the propaganda game when it comes to reassuring citizens life is getting better. This is yet another bogus attempt in believing that if they just get people to go back to spend spend spend and get further in debt, then this whole train wreck of a world will get back on track.
13:50 December 18, 2009 by markusd
To 2394040,

Put yourself in the shoes of a business manager who has to make decisions about how money will be invested. If taxes and interest rates are lower (so there is a better chance of making a larger profit), are you more or less likely to increase investment in new projects, along with the requisite spending on new equipment and hiring of new employees. If you simply imagine a few million business owners and managers coming to the same conclusion then you can see how the economy is affected in a positive manner.

Also, the economic problems in the U.S. were caused by a number of things but a major factor was the existence of Fannie Mae and Freddie Mac. These two government-created distortions were the only corporations that didn't have to report financial difficulties to the SEC. At the same time, the government was committed to backing their loans so that if they had any problems, the taxpayers would be forced to pick up the tab. There were a number of dumb decisions made by those within the framework of the free market but the effects would have been greatly minimized if such huge risks hadn't been shifted to the taxpayers without their consent.
14:49 December 18, 2009 by Argentox
I agree with you 2394040. The worst just coming! The baby boom will hit Sweden in 2011-2012 then gonna be really bad situation.

After the second World War everybody was "making" kids. One family had 8-12 children and this happened 62-63 years ago. So 2-3 years and these people part of the baby boom will become 65 years old, and retired. So the question how the government will pay out the pension for them? The workers of today? I doubt that. Just look how many children a family have today? 1-2-3 ?

So I think there will be a drastic reduce on pensions, or so because it´s mathematically impossible. 100 workers can´t feed 10,000 people. Economy over the worst? Let´s see...
15:29 December 18, 2009 by rightwingnutjob
To markusd:

Quit drinking the LSD spiked koolaid of Rush Scumball and the other right wingers about Freddie and Fannie. They are not responsible for the majority of loans made by PRIVATE and COMMERCIAL banks to middle income Americans and large property developers. Irresponsible lending came about as a result of these bankers seeking less regulation about the lending process. Too many middle income Americans bought properties they simply couldn't afford. And the banks knew it. The W. Bush admin. ultimately helped the bankers shift the burden of risk to the taxpayers. If responsible governance had occurred during this joker's reign this bubble simply wouldn't have occurred. Free markets simply don't regulate themselves. Greed and hyper-rationality take over when actors are regulated and they can shift the burden of risk to someone else. At least, be accurate in your portrayal of the mess and place blame where it is due.
23:38 December 18, 2009 by lingonberrie
he years 2011 and 2014 are a long way off.

Just wait and see what 2010 first brings.

My eyesight is getting better because I can through this smoke-screen report to the smoke-maker, and that smoke is not coming from anyones' pipe or cigarette.
12:14 December 19, 2009 by skatty
It's relative to what WORST might be considered and by WHOM, authority, under-class, over-class, middle-class….?!
13:49 December 19, 2009 by krigeren
Sweden is in for a rough ride. Tax breaks are a good sign however, interest rates are a short term measure.

Look at foreign direct investment, look at the balance of trade, look at unemployment AND count those who are unemployed and looking for work or in retraining programs. Those are real and meaningful measurements of a healthy and productive economy not the transfer of capital from the government sector to the private sector....thats just a shell game.

The exciting thing about being in Sweden for the next few years for those that can keep their head above water is their will be an incredible shift in ownership from a great deal of traditional concerns going under to those who can make use of it and pick up capital equipment and real estate at bargain basement prices.

Their is a great and deep satisfaction about buying the rug out from under those who have felt a sense of entitlement and arrogance their whole lives.
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