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IMF warns Sweden of its house prices that are too over valued



 




Wednesday, 01 June 2011
Sweden's exit from the global crisis has been uniquely successful in comparison with other EU countries. But house prices are too high, according to the, International Monetary Fund (IMF).

We have been shouting on this network about this phenomenon but the IMF is coming again after it did last year. The IMF notes after its annual visit to Sweden that GDP growth reached 5.75 percent in 2010, where private consumption, exports and house prices rose.
"This momentum has persisted into 2011. Unemployment has fallen from their levels at the middle of the crisis and core inflation has remained close to the target. The tension in the financial sector, much of which was imported in 2008 and 2009, has been limited, " said the IMF.
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The IMF said that global growth is expected to slow down slightly in 2011-2012 after recovery in 2010. The forecast is that the economic growth in Sweden will be slightly below the rate achieved in 2010.

IMF warns that Sweden will be affected if the problems in countries including Greece and Portugal spread to other euro countries.

"And even if that does not happen, Swedish house prices appear to be overvalued and it is therefore likely to see persistent price declines, "said the IMF.

The IMF believes that the Riksbank should continue to raise interest rates steady, the Krona is still competitive and the housing market is highly over valued. Furthermore, measures should be considered if home prices begin to rise again.

The IMF notes that the policy must be balanced. Tightening of monetary policy may not be too aggressive given that there remaining spare capacity. At the same time there should be restraint to prevent problems from developing, mainly in the domestic housing market.
By Scancomark.se Team


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