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ECONOMY

Clinton praise as Sweden woos Davos

Sweden's prime minister Fredrik Reinfeldt will on Friday address the ongoing World Economic Forum in Davos to explain Sweden's relative economic prosperity as ex-US president Bill Clinton joined the chorus of admirers, reported the business daily Dagens Industri (DI).

Clinton praise as Sweden woos Davos

The Swedish model is back in fashion at this year’s meet of the global finance elite and government heads in the Swiss mountain resort of Davos.

As the economies of the EU and the USA struggle to emerge from the effects of the financial crisis, Sweden is in contrast reporting strong growth and stable state finances.

“We are at odds with the rest of Europe which the world sees as weighed down by problems,” Reinfeldt said in Davos at a press briefing on Thursday, pointing out Sweden’s sound finances and high growth in employment.

Eva Cooper at liberal think tank Timbro told The Local on Friday that the praise received by Sweden internationally is justified and much of the success depends on finance minister Anders Borg’s control of the state finances.

“Anders Borg is the answer. It has not been so clear before that the finance minister has had such an overarching control of all areas and this has functioned well during the financial crisis,” Cooper said, adding that Sweden has thus been able to avoid the instability in other EU countries such as Greece.

“It has been shown that it is not wise for states to live on borrowed money, Sweden has some lessons to teach on this issue.”

Reinfeldt will on Friday present the case for why Sweden, together with its Nordic neighbours Finland, Norway and Denmark have weathered the financial storm of recent years fairly well.

And according to Dagens Industri, ex-US president Bill Clinton is among those praising the country’s economic achievements, arguing that Sweden’s climate change policies are to thank for the country’s relative economic buoyancy.

“Sweden is basically the only country which has achieved its climate goals,” said Clinton.

Notable dignitaries who are expected to be in attendance to listen to Fredrik Reinfeldt include the OECD’s secretary-general José Angel Gurria and Harvard economist Kenneth Saul Rogoff.

Gurria last week compared the strength of the Swedish economy to that of the popular Astrid Lindgren character Pippi Longstocking during a conference in Stockholm.

Ángel Gurría went on to praise Sweden, declaring the country “an island of prosperity” in very shaky waters, while warning that as a small economy a number of elements were out of its 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.

Eva Cooper agreed that challenges remain and warned that there is a danger that all the praise could go to Sweden’s head.

“There is a danger that we continue in old patterns – that we have a model and are sticking to it. In my view there are areas that would need to be changed more and establish that there are things other than state initiatives that can create security in society,” she told The Local.

Anders Borg has meanwhile forecast that the Swedish economy is set to grow at a rate of 6-7 percent in the first quarter 2011.

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ECONOMY

‘Tougher times’: Sweden’s economy to slow next year

Consumers in Sweden are set to crimp spending over the rest of the year, pushing the country into an economic slowdown, Sweden's official economic forecaster has warned in its latest prognosis.

'Tougher times': Sweden's economy to slow next year

A combination of record high energy prices over the winter, rising interest rates, and inflation at around 10 percent, is set to hit household spending power over the autumn and winter, leading to lower sales for businesses and dragging economic growth down to just 0.5 percent next year. This is down from the 1.2 percent the institute had forecast for 2023 in its spring forecast. 

“I don’t want to be alarmist,” Ylva Hedén Westerdahl, forecasting head at the Swedish National Institute of Economic Research, said at a press conference announcing the new forecast. “We don’t expect the sort of economic slowdown that we saw during the financial crisis or the pandemic, where unemployment rose much more. But having said that, people who don’t have a job will find it tougher to enter the labour market.” 

She said that a shortage of gas in Europe over the winter, will push electricity prices in Sweden to twice the levels seen last winter, while the core interest rate set by Sweden’s Riksbank is set to rise to two percent. 

As a result, Sweden’s unemployment rate will rise slightly to 7.8 percent next year, from 7.7 percent in 2022, which is 0.3 percentage points higher than the institute had previously forecast. 

On the plus side, Westerdahl said that she expected the Riksbank’s increases in interest rates this year and next year would succeed in getting inflation rates in Sweden under control. 

“We expect a steep decline in inflation which is going to return to below two percent by the end of 2023,” she said. “That depends on whether electricity prices fall after the winter, but even other prices are not going to rise as quickly.” 

After the press conference, Sweden’s finance minister, Mikael Damberg, said he broadly agreed with the prognosis. 

“I’ve said previously that we are on the way into tougher times, and that is what the institute confirms,” he told Sweden’s state broadcaster SVT. “There’s somewhat higher growth this year, at the same time as fairly high inflation which will hit many households and make it tougher to live.”

Damberg called on Sweden’s political parties to avoid making high-spending promises in the election campaign, warning that these risked driving up inflation. 

“What’s important in this situation is that we don’t get irresponsible when it comes to economic policy,” he said. “Because when parties make promises left, right and centre, it risks driving up inflation and interest rates even more, so Swedish households have an even tougher time. Right now, it’s important to prioritise.” 

 The call 

Sverige är på väg mot lågkonjunktur enligt Konjunkturinstitutets (KI) senaste prognos. Enligt finansminster Mikael Damberg (S) är det därför viktigt att Sverige sköter sin ekonomi ansvarsfullt och vågar prioritera.

– Jag tror att alla partier behöver vara lite återhållsamma och inte lova för mycket, säger han.

Mikael Damberg tycker att KI tecknar en realistisk bild av Sveriges ekonomiska verklighet.

– Jag har sagt tidigare att vi går mot tuffare tider och det är väl det som KI bekräftar. Något högre tillväxt i år men sämre tillväxtförutsättningar nästa år samt fortsatt ganska hög inflation som slår mot många hushåll och gör det tuffare att leva, säger han.

Och vad vill regeringen göra åt det?

– Det är viktigt att vi i det här läget inte är ansvarslösa i den ekonomiska politiken. För när partier lovar vitt och brett till allt riskerar vi att driva upp inflationen, öka räntan ytterligare och svenska hushåll får det svårare. Nu måste man våga prioritera.

Se intervjun med Damberg om konjunkturläget klippet ovan.

“Electricity prices are going to be twice as high as last winter,” said 

Elpriserna kommer att bli dubbelt så höga som förra vintern, säger Ylva Hedén Westerdahl, chef för Konjunkturinstitutets prognosavdelning, på en pressträff.
Den lågkonjunktur som KI ser framför sig kallar hon trots det för en mjuklandning. Den handlar främst om att människor kommer att ha mindre pengar att konsumera.

“Brist på gas i Europa gör att energipriserna ser ut att bli rekordhöga under vintern”, skriver KI, och ser att inflationen kommer att närma sig 10 procent.

Deras prognos för styrräntan är att den ligger på 2 procent vid årsslutet, vilket gör att inflationen faller tillbaka snabbt under nästa år och Riksbanken låter då räntan ligga still.

KI tillägger att de offentliga finanserna är fortsatt starka och de bedömer att det finns ett budgetutrymme på runt 120 miljarder kronor för de kommande fyra åren.

Vad gäller BNP spår KI en blygsam tillväxt på 0,5 procent nästa år – en nedskrivning från tidigare 1,2 procent.

Prognosen för arbetslösheten under 2023 är 7,8 procent, 0,3 procentenheter högre än tidigare prognos.

Fredrik Fahlman/TT
Johanna Ekström/TT

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