Sweden reports a budget surplus for 2016, pats itself on back

Sweden reports a budget surplus for 2016, pats itself on back
Swedish Finance Minister Magdalena Andersson. Photo: Fredrik Sandberg/TT
The Swedish government has revealed that its latest economic forecast for 2016 shows the country's public coffers are operating at a surplus this year.
Finance Minister Magdalena Andersson presented the Ministry of Finance's latest economic and public finances forecast on Tuesday, and adopted a confident tone.

“We have had me as finance minister for two years, and we have had a surplus in public finances for two years,” Andersson said at a press conference.

Overall, public finances have been strengthened by almost 40 billion kronor ($4.26 billion) compared to 2015, the authority said, with reduced sickness benefit and migration costs contributing to that.

“As such we have a margin if we see an increased demand on welfare,” Andersson noted. The finance minister even celebrated results with a post on her official Facebook page, writing “the new prognosis for Sweden’s public finances is very bright”.

Technical adjustments in how EU contributions are accounted for and an increase in VAT intake is said to have contributed significantly to a greater improvement in public funds this year than previously estimated.

Sweden’s GDP is now expected to grow by 3.4 percent this year and 2.4 percent next year. In 2018 it is estimated to grow by 1.8. That is a marginal adjustment from the government’s previous estimates from September, which predicted growth of 3.5 percent in 2016, 2.3 percent in 2017, and 1.9 percent in 2018.

Unemployment in Sweden is expected to drop from 6.9 percent in 2016 to 6.5 percent in 2017 meanwhile, then 6.4 percent in 2018. Andersson admitted however that the road to achieving the Swedish government target of having the lowest level of unemployment in the EU by 2020 is a “somewhat slow” one.

The Swedish Ministry of Finance also announced that its forecasts will now feature a new measure following gaps in wealth in Sweden. The indicator tracks the distribution of income via the Gini coefficient, a rating of income inequality in societies.

And Andersson blamed previous administrations for changes in wealth distribution in the country.

“According to the OECD, growth in Sweden would have been more than seven percent higher between 1990 and 2010 if the income gaps had not increased so dramatically. Distribution of income is not just a matter of fairness – it is also important for growth. For this reason, we are now further highlighting the results of the analysis in this area,” she said.

Robert Bergqvist, the chief economist at Swedish banking giant SEB, agreed that more focus needs to be placed on income inequality, a development which could be seen as an explanation for the international growth of populism in recent years.

“There are both economic and political grounds for that. This is a development that’s going in the wrong direction,” he told Swedish news agency TT.