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OECD verdict on the Swedish economy: Growth on the way down in the growth league

Wednesday, 25 May 2011
Despite all the heavy talks of the Swedish economic growth and the Swedish tiger economy, it looks like there are other countries that are growing faster that Sweden according to latest comparisons.

It looks like Sweden is slipping back drastically in the OECD growth league table as next year, according to the latest OECD forecast Sweden is pitted to move from its current forth place last year with a growth of 5.3 percent to a sixth place this year down to 13th place in 2012 with a 3.1 percent growth.

Sweden's economy will be growing therefore at the same rate as the U.S. and Hungary in 2012, according to OECD estimates.
For the OECD, growth in the years will fall to 2.3 percent, before rebounding to 2.8 percent in 2012.
Despite the slowdown in the Swedish economy,  OECD economists expects a robust growth in the Swedish labour market and continued solid demand for the export sector. At the same time it is expected that core inflation would be moderate.

Driving the growth is expected that both private consumption and investment would be high, which may be bolstered by a growing volume of lending by the country's banks.

Sweden's unemployment rate is expected to fall an average from 7.5 percent this year to continue downwards to 7.0 percent in 2012. Inflation, as measured by the consumer prices index, is forecasted at 2.9 percent this year and 2.4 percent in 2012.

The government financial look out looks stable, with a surplus of 0.3 percent of GDP this year and 1.4 percent in 2012.

The risk of disruption in global demand and a continued appreciation of the Swedish single currency - the Kroner are the main sources of anxiety for the Swedish economy, according to the OECD.

The organization's economists also point to a potential risk from inflationary problems if unemployment is falling faster than expected, while interest rates are low.

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They preclude the possibility of a correction in the housing market, in which lending to home purchases continue to rise, while house prices are also rising.
"There may be a risk to price stability and economic activity," wrote OECD.

Global growth is expected this year to fall to 4.2 percent from last year's 4.9 percent. In 2012, global growth is pitted to reach 4.6 percent, according to the OECD.
"The recovery from the deepest recession in decades is becoming increasingly broad at the base," the OECD in its forecast, and suggest that an increasing share of the growth is the increased demand at the consumer level.

OECD economists see a temporary slowdown in growth right now, as a result of the quake in Japan and its consequent effects and high raw material prices.
These effects should, however, be contracted in the second half of this year, given that commodity prices stabilize and inflation expectations do not soar, writes the OECD in its forecast.
U.S. growth is projected to increase from 2.6 percent this year to 3.1 percent in 2012. Euro zone growth is expected to also lie still at 2.0 percent.

For Japan, whose economy has been damaged by the quake and the nuclear disaster in March of this year, GDP will shrink by 0.9 percent this year according to OECD estimates. Next year, however, positive figures from Japan again with a growth of 2.2 percent.

Unemployment in OECD countries is projected to decline from 8.3 percent last year to 7.4 percent in 2012, while inflation will peak at 2.3 percent this year before falling to 1.7 percent next year.
By Scancomark.se Team




Key Swedish Facts
Official Name Kingdom of Sweden
King Carl XVI Gustaf
Prime minister Frederick Reinfeldt
Population 9.3 Million
Capital City Stockholm
Monetary Unit Sweden Krona (SEK)
  1kr = 100 ore
Domain Name .se
Int. Dialling Code +46
Official Language Swedish - Main
Other minor languages
Religion Christianity
Main stock market Name NASDQ OMX
  • OMX 40
  • OMX 30
Internet Speed 5.7 Mbps (2009)
Vital Links
Statistics Sweden
Official gateway to Sweden
Government of Sweden
OECD  &  Sweden
Swedish Central Bank

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