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Euro crisis start biting Sweden hard as GDP accounted to fall flat

Tuesday, 24 January 2012
Swedish GDP fell last quarter of last year and a further decline is expected in the first quarter of this year, according to an assessment made by Swedbank.

After strong growth for most of 2011, macroeconomic indicators now suggest that the Swedish economy is slowing significantly. Exports are receding, industrial production is stagnating, and labour market improvements are slowing.


The sluggish activities in the international market where Sweden rely on to sell its product showed a slump. Therefore there is weaker exports, industrial production and investment incentives, but also rising unemployment dampens household spending mood, writes Swedbank in its economic forecast on Tuesday.

GDP is expected to increase by 0.3 percent this year and 1.8 percent in 2013, not calendar effects. In the previous forecast, in August, it was expected that GDP growth would reach 1.8 percent in 2012 and 2.3 percent 2013.

Growth is revised downwards to 0.6percent for 2012 and 1.8percent for 2013 as the deepening euro zone crisis will continue to negatively affect the Swedish economy.

Worsening sentiments of both households and companies will strain consumption and dampen investments. “We expect unemployment to start to rise in 2012, before slowly falling back in 2013, as economic growth picks up moderately,” writes the bank

Riksbank's policy rate is expected to be at 1.00 percent at the end of 2012 and 1.75 percent at the end of 2013.
By Team

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