Swedes more positive about economy: study

Consumer confidence in the economy among Swedes is considerably more positive than normal, the National Institute of Economic Research (Konjunkturinstitutet) wrote in its latest monthly barometer.

However, the economic tendency indicator, which measures the overall mood among business and households, fell slightly by 0.3 points to 111.3 from 111.6 between June and July.

The positive economic mood among businesses and households is much stronger than usual, the institute wrote. The institute’s consumer confidence indicator rose 1.3 points between June and July.

Views on personal finances and the Swedish economy has become more positive and are significantly more positive than usual, the institute said.

The confidence indicator in the private service sector rose five points and is considerably above the historic average.

The confidence indicator for the manufacturing industry fell five points between June and July due to more subdued production plans among firms than in previous months. However, the indicator remains considerably above the historic average.

Indicators for the construction industry and retail trade remained at the same level as last month. The indicator for construction industry is considerably above the normal value, while the indicator for the retail trade is marginally above.

“These figures confirm the picture that the Swedish economy has developed very strongly in the first half,” said institute director Mats Dillén. “However, we can probably expect a certain slowdown in the second half.”

He took into account that growth in the Swedish economy grew by about 3.5 percent in the second quarter and for full year, he believes that GDP will grow by about 4 percent, which is somewhat more than what the institute had targeted earlier.

“We are now seeing in this poll how the employment situation is continually improving,” said Dillén. “The willingness of companies to hire is increasing and it applies to the construction industry in particular, which is beginning to experience difficulties in hiring staff.”

Meanwhile, households are expecting a hefty increase in mortgage rates over the next year to 3.4 percent. In June, households anticipated home interest rates of 2.8 percent over the next year.

In the next two years, households expect them to rise to 4.2 percent, compared a forecast of 3.7 percent in June. In five years, households expect home interest rates of 4.5 percent compared with the 4.3 percent they expected in June.

Inflation in a year is expected to reach 2.4 percent, unchanged from the previous poll in June.

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Sweden’s new right-wing govt slashes development aid

Sweden, one of the world's biggest international donors, is planning drastic aid cuts in the coming years, the country's new right-wing government said in its budget bill presented on Tuesday.

Sweden's new right-wing govt slashes development aid

Prime Minister Ulf Kristersson’s government said it planned to reduce the country’s international aid by 7.3 billion kronor ($673 million) in 2023, and by another 2.2 billion kronor in 2024.

That is around a 15-percent reduction from what had been planned by the previous left-wing government and means Sweden will abandon its foreign aid target of 1 percent of gross national income.

International aid for refugees will be capped at a maximum of eight percent of its aid, and will also be reduced.

According to the specialised site Donor Tracker, Sweden was the world’s eighth-biggest international aid donor in terms of absolute value last year, and the third-biggest in proportion to the size of its economy, donating 0.92 percent of its gross national income, behind Luxembourg and Norway.

The new government, which is backed for the first time by the anti-immigration Sweden Democrats, had announced in its government programme last month that it would be cutting foreign aid.

Since 1975, Stockholm has gone further than the UN’s recommendation of donating at least 0.7 percent of its wealth to development aid.

Despite its growth forecast being revised downwards — the economy is expected to shrink by 0.4 percent next year and grow by 2 percent in 2024 — the 2023 budget forecasts a surplus of 0.7 percent of gross domestic product.

It calls for an additional 40 billion kronor in spending, with rising envelopes for crime fighting and the building of new nuclear reactors, as well as a reduction in taxes on petrol and an increase in the defence budget.

The new government is a minority coalition made up of Kristersson’s conservative Moderates, the Christian Democrats and the Liberal party, backed in parliament by their key ally the Sweden Democrats to give them a majority.