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Swedes confident despite debt crisis

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11:12 CEST+02:00
Swedish businesses and consumers remain confident about the prospects for the economy, despite the debt crisis in the eurozone, according to a new report.

Consumers' confidence in the economy and in their own financial situations fell slightly in May, but remains is significantly stronger than normal, according to the National Institute for Economic Affairs (Konjunkturinstitutet).

The consumer confidence indicator, which measures Swedes' confidence both in their personal financial situations and in the country's position, fell 0.7 points to 18.8.

“Sentiment about the economic situation is however still significantly more positive than normal,” the institute wrote in a statement.

Confidence among businesses rose between April and May, with the manufacturing, construction and service sectors all reporting increased optimism. The retail sector reported a more negative view, with confidence falling by 7 points, mainly due to a weakened outlook for food retailers.

The overall confidence index, known as the barometer index, rose by five points.

“It still looks positive and is rising despite the trouble in Europe. It indicates that growth in the second quarter will continue to be very strong,” said Olle Holmgren, analyst at SEB.

The report also provided good news about the jobs market:

“Businesses' are continuing to plan for increased recruitment. They are at quite high levels now. This indicates that the employment rate could accelerate,” he said.

Holmgren said concern that the eurozone debt crisis would dampen Sweden's economic recovery was justified, but said there would be a delay before the effects were felt.

SEB expects, along with most other experts, that the Riksbank will in July raise the repo rate from its current record low of 0.25 percent. Holmgren said the new report would increase the likelihood of an interest rate rise.

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