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Swedish economic out look show more of a gloomy faces than otherwise. The Nordic tiger economy being tamed?

Wednesday, 20 June 2012
The Swedish economy is not performing well and various Swedish economic analytical houses are giving their verdicts and recommendations.

The leading economic think tanks, National Institute of Economic Research (NIER) in a report today have confirmed the picture that the Swedish economy is decelerating sharply.

It points that the Swedish economy continues to retreat. The so-called barometric indicator which gauges the economy fell by 1.7 units in June to 98.7, according to NIER. It was the third consecutive month that the indicator fell and is now below the historical average.

In the business sector, both the manufacturing and construction sectors contributed negatively to weak outlook. Also consumer confidence in the economy also fell, with the indicator dropping below the historical average.

The Riksbank, the central bank and the finance minister, Anders Borg are urged to should do more to counteract the weakening of the Swedish economy, NIER writes, estimating that inflation will not reach the target of 2 percent until 2016.

The economy is weakening and the euro crisis will take time to resolve assesses NIER in the forecast. Due to the unexpectedly strong growth in the first quarter, Sweden's GDP is forecast to increase by 0.7 percent this year, compared with the previous forecast in March of 0.4 percent.
Next year, growth is predicted to land at 2.3 percent, compared with the earlier estimate of 2.5 percent.

NIER believes that the government "should consider" temporary stimulus in the Budget of 2013 to keep down unemployment, which NIER tracks it to increase modestly, to 7.6 percent next year from 7.5 percent on average this year.

NIER predicts that the Riksbank should holds key interest rate unchanged at 1.5 percent, up to early 2014, but believes that the bank should be able to lower interest rates without jeopardizing the inflation target.
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