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Nordea predicts mixed prospects for Sweden

The Local · 4 Sep 2012, 10:14

Published: 04 Sep 2012 10:14 GMT+02:00

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The bank predicts that the Riksbank will decrease interest rates by 0.5 percentage points this year.

“With low inflation, a weaker labour market, low policy rates internationally and a risk of further SEK appreciation, the Riksbank should cut rates this year,” Nordea analyst Torbjörn Isaksson wrote in the report.

Nordea predicts a growth of 1.2 percent in 2012 and 1.8 percent the year after. Unemployment will rise above 8 percent during winter, according to the report.

According to the report, Swedish industry has been weighted down by weak demand for Swedish exports from the rest of the world, while the krona has been strong.

But Nordea predicts that the situation will improve next year when the Eurozone economy is believed to improve. A better Eurozone outlook will lead to increased demand and a weaker krona.

“The SEK has become a safe-haven currency in 2012. The reasons are the modest exposure of the Swedish economy to troubled areas, solid public finances and a highly competitive business sector that generates surprisingly strong growth and increased interest rate differentials,” Isaksson wrote in the report.

Overall, Nordea predicts mixed prospects for the second half of 2012, forecasting a subdued growth short term but a pick-up in activity in the long term.

“A benign situation for households, a slightly more expansionary economic policy and a global economy that gradually recovers are the factors that will underpin higher GDP growth in coming years," Isaksson wrote.

Due to global weakness, growth will only accelerate slowly and unemployment will not decline until the latter part of the forecast period, according to Nordea’s analysts, who despite this predict stable finances for Swedish households.

Story continues below…

Rebecca Martin

Follow Rebecca on Twitter here.

The Local (news@thelocal.se)

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Your comments about this article

12:17 September 4, 2012 by Abe L
If it's the households keeping the wheels turning, isn't lower tax pressure and more disposable income a more appealing solution rather then just decreasing interest with a marginal amount?
17:36 September 4, 2012 by Swedishmyth
Solution to what? Lower taxes would mean increased autonomy for individuals, a notion that is anathema to Swedish brand authoritarianism.
10:29 September 5, 2012 by smilingjack
the eurozone will pick up next year. your funny.

these type of comments are from the same people who never saw the gfc coming.

didnt have a clue then and dont now.

look at australia ( also in the middle of a property boom ) but at least you can rent your apartment there. where the mining industry has hit a brick wall and the spiral down is gaining speed rapidly.

the USA debt clock has officially ticked over to $16,000,000,000,000 now.

yep things sure are going well.

the illusion of wealth created by debt.
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