Sweden bullish about prospects for growth
TT/David Landes · 27 Jan 2010, 14:45
Published: 27 Jan 2010 14:45 GMT+01:00
- Borg seeks US-inspired European bank tax (19 Jan 10)
- Crisis takes its toll on Sweden's balance sheet (12 Jan 10)
- Swedish economy over the worst: report (18 Dec 09)
In its previous forecast, presented in November, the government projected that the Swedish economy would only expand by 2.0 percent this year.
According to the new forecast, however, the economy is expected to grow by 3.0 percent in 2010, 3.6 percent in 2011, and 3.2 percent in 2012.
Unemployment will also continue to rise in 2010, however, reaching 9.5 percent before dropping down to 8.9 percent in 2011 and 7.6 percent in 2012.
Meanwhile, inflation is also expected to creep up in the following years, with consumer prices inching up by 1.3 percent in 2010, 2.1 percent in 2011, and 2.7 percent in 2012, according to the government’s new forecast.
Finance minister Anders Borg admitted even he was surprised when his colleagues presented him with the new unemployment projections.
“It’s quite a strong downward revision of more than 4 percent, if you look a few years down the road,” he said at a Wednesday press conference.
“We’re going to be at a level of around 4 to 5 percent unemployment within a few years.”
Public finances are also expected to improve more quickly than previously thought. In December 2009, Borg projected the state’s budget would come out of its current deficit by 2013 before heading into 1 percent surplus in 2014.
“My assessment is that we can reach a balance earlier and that the surplus will be greater than 1 percent in 2014,” said Borg.
Despite the rosier projections, Borg was careful about promising additional reforms during the next government term, even if public finances reach a surplus.
He added, however, that he doesn’t plan to tighten fiscal policy in 2011 and 2012 if still in office, mentioning temporary measures to dampen the effects of the financial crisis for certain segments of society who have seen their economic situation deteriorate as possible areas where additional government spending may occur.