“The Swedish economy started to recover in mid-2009 and gained further momentum in 2010. The high growth will ease next year and accelerate again in 2012,” the bank wrote.
The bank forecasts that GDP growth will amount to 4.2 percent in 2010, 2.8 percent in 2011, and 3.1 percent in 2012.
Nordea observed that Sweden’s export industry has benefitted from the improvement in global trade and even if the international economy slows down, “domestic demand in Sweden will contribute to sustain growth”.
Industrial production continues to rise and order inflows indicate a continued upswing with benefits for the improving labour market and stronger public finances, which the bank forecasts as “heading for balance as early as this year”.
Despite continued rising prices throughout the recession, the household sector is reported to be in good shape and car sales have also surged.
Inflation is expected to pick up slightly in the next few years with further interest rate hikes from the Riksbank to be expected.
“We expect the repo rate to reach 1.25 percent at the end of 2010 and 3 percent in two years’ time,” Nordea forecasted.
The assessment of the Swedish economy is presented as part of a broader overview of the Nordic region which Nordea claims is well prepared to withstand any international slowdown.
“The need for radical fiscal policy austerity measures is much smaller here than in most other countries,” the bank claimed with all the Nordic economies showing positive momentum.