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Sweden 'strong like Pippi Longstocking': OECD

AFP/The Local · 20 Jan 2011, 12:43

Published: 20 Jan 2011 12:43 GMT+01:00

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"The Swedish economy is strong like Pippi Longstocking," OECD secretary general José Ángel Gurría said.

The organisation forecast continued strong Swedish growth of 3.9 percent this year and 3.4 percent in 2012.

Despite the impressive numbers, Ángel Gurría warned that a number of elements were out of the country's hands.

"Sweden is a success story, even though you are vulnerable to things you have no control over because you are a small open economy," he noted.

Ángel Gurría went on to praise Sweden, declaring the country "an island of prosperity" in very shaky waters.

"And when I say it, your interest costs will decrease even more," he joked.

The OECD's estimates for strong growth in Sweden in the coming years are bolder than many Swedish economic analysts' expectations. GDP grew by 5.2 percent last year and is expected to grow by 3.9 percent this year.

The organisation also expects the strong growth to continue in 2012 by an additional 3.4 percent.

Sweden has weathered the global financial crisis well, OECD economists stated in their analysis of economic developments in Sweden. The crisis has shown that the Swedish economic framework works well, the organisation said.

The OECD lauded Sweden for heeding the experiences of its own problems in the past, saying the country "learned the right lessons from the severe banking crisis in the early 1990s."

Sweden also won praise for its "ambitious" action in reducing greenhouse gas emissions. However, the OECD noted that its goals could be achieved at a lower cost. The OECD also noted that it is time to roll back the emergency measures that were in place to mitigate the crisis.

This means that support for banks could be withdrawn, while at the same time, it is time for Sweden's central bank, the Riksbank, to raise interest rates. However, the Riksbank was criticised for communicating that the economic situation in the country was "improving."

In addition, the OECD believes that the division between the Riksbank, the Swedish National Debt Office (Riksgälden) and the Swedish Financial Supervisory Authority (Finansinspektionen) needs to be revised and become more transparent.

"There is a kind of fragmentation in terms of the responsibilities between the three institutions. The overhaul need not result in only one supervisory body, but coordination is important," said Ángel Gurría.

Story continues below…

The labour market has taken a turn for the better, but the OECD warns of the risk of long-term unemployment becoming entrenched at high levels. In its forecast, the OECD forecast the Swedish unemployment rate at 8.4 percent for 2010, 8.0 per cent this year and 7.5 percent in 2012.

"Due to the government's reforms to get more people into work, we are now in a stronger position than many other countries. But we must continue to improve the functioning of the labour market by making it more worthwhile for low and middle-income earners to work," Finance Minister Anders Borg said at the conference.

"At the same time, the government must also safeguard Sweden's position with strong public finances. We will protect and strengthen the methods we use to deal with crises in the financial system and banks in crisis, without great burden on public finances," he added.

"The problems that countries around the world are experiencing with their public finances underline the importance of this," Borg continued.

AFP/The Local (news@thelocal.se)

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Your comments about this article

12:49 January 20, 2011 by Russ Cobleigh
If this true, then why are these factories not doing any hiring, I and thousands of others are still out of work and looking, BUT; having a hard time finding work.
15:51 January 20, 2011 by Roy E
Hmmm. An obnoxious little girl whose neck you'd like to wring?

I would have tried to come up with a slightly better analogy.
16:40 January 20, 2011 by Great Scott
What is this brain washing that is happening in Sweden? I hear that the unemployment figures are being distorted and actually double to what the government claim. If people are doing further education they are not included, and unemployed people working for nothing are taken off the list.

And that is a joke thousands of people working for nothing if they are unemployed, is that because no one can afford to pay their wages? No wonder there is high unemployment in Sweden (under 25's), all the jobs are being filled by the unemployed, joke.

Your Mr borg is lying to you.
18:06 January 20, 2011 by miss79
this THE LOCAL online is always lying when it comes to economy, employment..i hope GOD will punish u ,if not now, maybe next life..too much propaganda
20:35 January 20, 2011 by conboy
Would this be the same OECD who issued a glowing report on the economic policies of the Irish Fianna Fail (business friendly) Government in 2007? Highly amusing stuff!
00:43 January 21, 2011 by Buckshot
So many bitter people on this forum.

Why would mr Gurria lie?

To all the haters:

Get a haircut and a job.
01:09 January 21, 2011 by Tanskalainen
@Russ The Swedish army is hiring right now! (Hide your rifle from Santa though).
16:02 January 21, 2011 by Don-Griz
I find that many who post negatively about any success of Sweden neither live in Sweden nor are Swedish themselves. Many are right-wing Americans who simply cannot accept the fact that the Swedish style social democracy has succeeded where American style capitalism has failed.

Of course there will always be some people who find it difficult to find work at times; but, at least you have access to education and health-care without having to declare bankruptcy due to medical debt. If America style capitalism is what you want, go to where it is practiced. One more in the old "melting-pot" won't change the taste of that fetid stew.
17:17 January 21, 2011 by tadchem
Don-Griz> "If America style capitalism is what you want, go to where it is practiced." Nowadays, that would be China.

The US government is nationalizing many industries 'under the table' - the Financial industry, the automotive industry, the health care industry - as fast as it can. The rest are being regulated to death - the energy industry, the chemical industry, the agricultural industry, manufacturing. Small capitalist start-ups are being locked out by unfunded mandates and freezing of small business loans.
01:16 January 22, 2011 by mkvgtired
Don-Griz, capitalism and democracy are completely different things. For example, America is a partially capitalist democracy, whereas China is partially capitalist communist system (I know it sounds contradictory). One is a political system, one is an economic system.
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