Swedbank writes up Swedish GDP growth as sweden "evolves from a tiger a house cat".


Tuesday, 23 August 2011
The type of tools Sweden has used to insulate its economy against external shocks are so effective that despite the stormy outlook of the world economy, Sweden still feels that its economy will grow well.

Today, the bank, Swedbank, feels in its new forecast that the Swedish GDP growth in 2011 will surpass previous perception and will land at 4.3 percent. This is in fact an upward revision from previous depressed 4.0 percent in a forecast in April.

For 2012 the bank down graded its forecast from a previously 2.2 to 1.8 percent and 2013 growth was placed at 2.3 percent.
Swedbank also expects that the Swedish central bank, the Riksbank's policy rate will remain at the current 2.0 percent for the rest of the year. Then the Riksbank's interest rate will resume and rises during the first half of 2012. Two further increases will take place in the second half. At the end of the first half of 2013, the repo rate will be 3.0 percent, according to Swedbank.


The bank also believes that unemployment will fall to 7.5 percent and then continues gradually down to 6.9 percent by 2013

Swedbank repeats again in its latest forecast that the risk of a new global recession is low.
"Given the great uncertainty, our main scenario, and a probability of 60 percent, we assess the risk of a new global recession to 30 percent possibility.”

“During a recession, Sweden has a better starting point for economic policy than most other industrialized countries,” says Magnus Alvesson, an economist at Swedbank. “However, there is a risk that the pursuit of sense of responsibility also leads to inaction, and thus may represent an overly tight fiscal policy in the coming years.”

Swedbank assesses now that the recent record high Swedish growth will slow down to more prudent levels in the shadow of the global financial turmoil. Chief economist Cecilia Hermansson believes that Sweden is no longer a tiger.

“Sweden's economy mutates from tiger to reliable farm cat,” says Cecilia Hermansson, as GDP growth - despite the global turmoil - albeit lower still gets decent and broad-based.
By Team

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