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Scandinavia Today / Sweden


Swedish households could be en-route to saved the Swedish economy

Tuesday, 19 March 2013
The Swedish household looks to have saved the Swedish economic growth this year.
The reason for this is that the Swedish household purchasing power is strong, and it contribution to the Swedish economy is looking good when compared with many other countries.

According to various assessments from the Confederation of Swedish Enterprises, the renewed uncertainty about the euro zone's crisis countries means that Northern Europe again seems exempted from chaos in the euro-zone economy. As the bright lights continue to shine in the North, the U.S. and China are also recovering at a better rate than expected.

Not all is dark in the euro zone though - Germany has an export industry that has hardly any equal in the world.

The Swedish economy is moving from a period of stagnation in which the last months of growth projection was that growth would reach 1.3 percent this year. Now it is projected that the growth will increase by a further to 2.6 per cent in the 2014.

Unfortunately, unemployment will remain high - over eight percent. The Riksbank, the central bank, has now reached its limits in terms of interest rate cuts. The next decision will be a rise in June, believes Annika Winst, the bank's chief economist.

The Confederation of Swedish Enterprise, assumes that the Swedish economy  will  grow by 1 percent this year and 2.2 percent next year. Unemployment will be at just over eight per cent in 2013 to 8.2 percent and in 2014  8.1 percent.

Confederation of Swedish Enterprise believe that inflation, as measured by the CPI, will be 0.5 percent this year and rise to 2.0 percent 2014.

Growth slowed faster last year. However, while the economy weakened several indicators show that the pessimism has subsided and more and more believe that the turnaround is near.

"The state in companies continues to deteriorate and exports are falling and new orders have not turned up yet, says Björn Lindgren, economist at the Confederation of Swedish Enterprise.

But at the same time it shows that there is optimism in the business and they expect increased production in the future.
"We expect that the Swedish economy has bottoms in early summer and then turn slowly upwards to in the fall," says Lindgren.
He also stresses that it is important for the recovery to also affect wages, not least in terms of minimum wages.
"Young people, those with immigrant background and long-term unemployed are finding it more difficult to enter the labour market if the minimum wage is too high," says Lindgren.
Overall, unlike for example the UK where austerity has crippled consumption, the Swedish view is that domestic consumption is very good for the economy and heavy reliance on exports could be a folly.
By Team

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