Swedish consumers optimistic about future

Swedish consumers optimistic about future
Swedish consumers are increasingly confident of the prospects for the country’s economy, according to a new report, but growth could be hit by austerity measures in Europe.

The report, from the National Institute of Economic Research, showed consumer confidence rising by three points in June, having fallen in May. The institute’s ‘growth barometer’ has risen by 40 points since its nadir in April 2009. The current level of consumer confidence is well above average.

The institute predicts GDP growth of 3.7 percent this year, falling to 3 percent next year and 3 percent in 2012.

“The Swedish economy is on the road to recovery. The turning point has been passed with the aid of an expansionary economic policy and a rapid upturn in demand for Swedish exports of goods,” the institute writes in the report.

But the recovery is threatened by problems with the public finances of many of Sweden’s European neighbours, said Mats Dillén, head of the institute:

“Things are looking quite good right now, both when it comes to production and the labour market,” he said.

Asked whether the political parties would be able to promise voters extra spending or tax cuts ahead of the election, Dillén said that the prognosis had assumed “unfinanced reforms of 25 billion kronor in 2011.”

Unemployment looks set to fall, and is expected to descend to below the levels set out in previous prognoses.

“Unemployment will be under 9 percent both this year and next,” Dillén said.

This year’s collective bargaining negotiations between unions and employers had together with increased production kept labour costs down in the private sector.

Inflation is expected to fall this year, when the impact of increased mortgage rates is discounted.

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