Swedish economy on the mend

Sweden is expected to post a budget surplus next year as the effects of the financial crisis continue to recede, according to a financial authority report.

“The economic recovery, together with strong finances in the first place, will almost bring balance (in the central government budget) as early as next year, with substantial surpluses expected further ahead,” the Swedish National Financial Management Authority said in a statement.

The agency, which operates under Sweden’s finance ministry, forecast that the country’s economy would gradually begin to swell this year.

After suffering its largest annual setback in more than half a century last year, when GDP shrank 4.9 percent year-on-year, Sweden’s economy was expected to grow 2.6 percent this year and just over three percent per year between 2011 and 2014, is said.

Unemployment, which stood at 9.3 percent in February, was also expected to begin backtracking.

“The increase in activity will bring increased demand for labour, which means that employment is expected to start to rise again,” the agency said, adding that Swedish unemployment would likely peak this year at 9.4 percent before falling gradually to 6.6 percent in 2014.

The agency also said Sweden’s central government debt would amount to just 25 percent of the country’s gross domestic product (GDP) in 2014, “its lowest level since the mid-1970s.”

Sweden’s central government debt, which unlike the public debt does not include social security and regional authority obligations, stood at 37.6 percent of GDP at the end of last year and was expected to drop to 36.7 percent this year and then gradually decline to 25.1 percent four years from now, the agency said.

Sweden’s total public debt stood at around 39 percent at the end of 2009, down from its all-time high of 76 percent of GDP in 1996.

Although Sweden is not a member of the eurozone, it is one of few European Union countries to fully respect the Maastricht criteria for euro countries, which among other things require that public debt not exceed 60 percent of GDP and that the annual public deficit remain below three percent of GDP.

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