Sweden hikes GDP forecast

The Swedish government has raised its forecast for growth and calculated that Sweden's GDP will grow by 3.3 percent in 2010, 0.8 percent up on the forecast presented in its spring budget on April 15th.

Unemployment is expected to be 8.9 percent this year and decline to 6 percent in 2014. The number of those employed is expected to have increased by 100,000 from 2006-2010.

Public finances are in balance and are forecast to show a surplus in 2012, with the surplus goal of 1 percent GDP restored the year after, the government predicts.

The extent of the scope for reforms is currently uncertain and is deemed to be limited.

“There is substantial uncertainty in the scope of reform possibilities during the whole of the next mandate period,” the finance ministry wrote in a statement.

2011 is expected to provide some scope for tax and benefit reforms, expanding slightly by the end of the mandate period.

The government expects GDP to grow by 3.8 percent in 2011, 3.9 percent in 2012, 3.3 percent in 2013 and 2.7 percent in 2014.

The government’s projection are considerably more optimistic than several other bodies. The National Institute of Economic Research (Konjunkturinstitutet – KI) in its latest report predicted GDP growth of 3 percent in 2011 and 2.8 percent in 2012, for example.

But for the current year, in comparison to KI the government is somewhat cautious, with the institute forecasting growth of 3.7 percent for 2010.

The government identified several risk factors – including the state debt crisis in southern Europe, and a “poorly chosen policy mix overseas, with a weak balance between cuts and stimulation measures”.

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