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IMF warns Swedish economy 'vulnerable'

AFP/The Local · 16 May 2012, 07:17

Published: 16 May 2012 07:17 GMT+02:00

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Sweden has long secured strong growth thanks to its "robust policy frameworks and sustained reform initiatives," the IMF said in its country report, but "after many years of success, the outlook for growth is clouded."

Sweden's economic health "is closely tied to that of Europe given that the economy is very open and that two-thirds of exports go to Europe, as does much of the financial sector's external lending."

The IMF noted that as elsewhere in Europe, stresses in Sweden's banking system have risen since the autumn of 2011 and growth momentum has weakened, led down by exports.

"And though the krona is competitive now, it remains on an appreciating trend which, if continued, would compound the drag on growth," the report said.

Weak demand for exports was likely to continue, it predicted, forecasting growth of zero to one percent in 2012, "with activity regaining steam from mid-year."

"But near- and medium-term downside risks to these projections are significant, reflecting European fragilities."

Sweden's finance ministry in April slashed its growth forecast for 2012 from 1.3 percent to just 0.4 percent due to consequences from the Eurozone debt crisis.

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The IMF also noted that while Sweden's direct exposures to strained eurozone economies were negligible, its financial system was large (5.5 times GDP) and the banking system was directly exposed to many other European economies.

Meanwhile, the Fund urged the country to make its tax structure more "growth friendly", mainly by better targeting tax and expenditure measures to support employment of vulnerable groups in society.

It suggested that deregulation of the housing rental market could reduce shortages and improve employment prospects, notably in big cities.

AFP/The Local (news@thelocal.se)

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Your comments about this article

08:07 May 16, 2012 by skogsbo
good old IMF, target relatively financially stable nations, whilst chaos reigns within 50% or more of the Euro nations! There isn't a currency in Europe that won't be impacted if Greece doesn't get a grip soon. Sweden will be sending food parcels to the Greek at the current rate of events.
09:28 May 16, 2012 by Abe L
What about building infrastructure and parking in the big cities so people could just get to work without having to live there? There are to many cases where public transportation is non existent or not sufficient, but a 20 minute commute becomes a 1 hour commute due to congestion which is the sole result of lack of roads.

Deregulating the housing markets isn't magically going to make prices drop and make property available to those who need it. At best it helps a handful of people.
10:28 May 16, 2012 by engagebrain
Abe L - your comments are rather off topic

You want to live in place A while working in place B and also want to be able to drive and park without hindrance. While the infrastructure you want would be great for you, especially if someone else pays, the result would be to turn place B into place unft for people but great for cars and similarly affect everywhere between A and B. The space needed for roads and parking essentially makes commuting by car bad news for everyone but drivers - live where you work or use public transport.
11:32 May 16, 2012 by Alohart
Abe's suggestions are those followed by most U.S. cities where they've been spectacular failures. One cannot build enough parking structures or enough city streets to accommodate those who wish to drive rather than take public transportation.

If you live in a place without sufficient public transportation, then drive to a park-and-ride location to complete your commute rather than fighting traffic and lack of parking in the city center.
12:06 May 16, 2012 by skogsbo
part of the problem is companies reward employees with company cars or give them a grant every year towards transport. They should just insist that the only transport perk is a pre paid travel card, paid direct by your employer, with a tax perk from the government for the company. Too many people drive to work alone etc.. Encourage more home working, where everyone who can works from home 1 day week. That's 20% of office space, parking and transport network use saved. It's not hard, but it does require some changes.

However, none of this will save the Euro or the Greeks!
13:59 May 16, 2012 by libertarianism
"The Fund urged...measures to support employment of vulnerable groups in society."

Sweden also has to agree upon how to talk about / name vulnerable and non-vulnerable groups.

Regarding transportation, I wish trains were more affordable and all parking lots were hidden below ground or at least incorporated into a building's structure. More green, less asphalt and concrete please. Like the work-from-home one day idea as well.
16:45 May 16, 2012 by byke

HAHAHA .... Flying the flag will save you .... HAHAHA
17:57 May 17, 2012 by EtoileBrilliant
@Abe L

Out of the 12 friends of my wife who lived in the city, 10 of them moved to the bubs after their 2nd child so that they could have 270 sq m villas. For the same money we can buy a 130 sq m apartment in the city.

These are what we call "lifestyle choices", if you want to buy a villa in the country at least have the decency to buy one near one of Stockholm's excellent public transportation links. Don't go and live in sticks and complain there are no buses or trains.

Both my wife and I walk to work, our 4 children walk to school - the last thing I want to see is investment in more roads. I'll vote for the politician that pedestrianizes Kungsgatan and whatever other roads takes his fancy.

And yes, I own a car. I just don't choose to shove the fumes down other peoples throats.
22:24 May 19, 2012 by marcus anthony bynum
the motivation behind this paper was primarily to examine whether the terroist attack of september 11th, 2001 , had any negative impact on inward fdi in the u.s. if any changes are observed, while there may potentially be multiple contributing factors- one such could be that business are afraid of futher terroist activity within the united states..
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