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Political Economy

More woes for the Swedish Economy as Finance Minister, Anders Borg lowers growth forecast

Friday, 21 December 2012
The Swedish government is cutting its growth forecast for 2013 significantly, from 2.7 to 1.1 percent. Finance Minister Anders Borg has thus more than halved the Swedish GDP forecast for next year from 2.7 percent to 1.1 percent.

However, the government still believe that GDP growth will take real momentum in 2014, up 3.0 percent. In a previous assessment, the growth forecast for 2014 at 3.7 percent.

The government predicts that unemployment will rise from 7.7 percent this year to 8.2 percent in 2013, before rising further to 8.3 percent 2014.
"There are some lean years ahead," said Anders Borg at the press conference.
"The recovery will be late and weak. The labour market may be described as weak and thin over the years," said Borg.
Anders-borg

How deep the slump will be is difficult to assess, according to Borg. Therefore, it may be appropriate with efforts to support growth next year, as well as 2014 and 2015.

"It may be vital to review the labour market measures and perhaps implement some parts of the job pact somewhat earlier," he said.
The government has for several months sharply been criticized for being too optimistic in its assessment of the Swedish economy, and underestimate the impact of the recession the country is facing.

With the new forecast, Anders Borg wants to settle closer to other analysts. The National Institute for economic research, NIER forecasts which came out earlier this week predicts a GDP growth of 0.8 percent and an unemployment rate of 8.3 percent next year. The central bank or the Riksbank is a little less pessimistic and believe that growth will be 1.2 percent and the unemployment rate will be 8.1.

Anders Borg predicts that there will be deficits in the economic performace as s measured in GDP for three consecutive years, 2012 - 2014. Next year, the financial balance of the public sector will be -1.3 percent of GDP. 2014it will be minus 0.6 percent.
Employment is expected to decline by 0.1 percent in 2013 and then rebound by 0.2 percent the following year.
by Scancomark.com Team

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