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Sweden to face two lean years of growth but to maintain budget surplus – a new assessment

Friday, 16 December 2011
The Swedish economy is somewhat weaker than previously thought as a result of external factors but yet the Swedish Finance Minister, Anders Borg, sees a surplus in the state budget over the next four years, according to a news assessment.

The Swedish Financial Management Authority, Ekonomistyrningsverket (ESV), believes that after two years of strong recovery after the collapse in 2009, Sweden’s economy will run into the wall next year.
Growth is expected to be only 0.1 per cent in 2012, followed by a thin 1.5 percent 2013, traced the Swedish Financial Management Authority, ESV, which makes predictions and analysis for the state's economy outlook in the coming years.

"Growth prospects are weak for both the eurozone and the U.S. in the coming years, and Sweden will be affected by the weaker global demand by slowing exports. Household consumption is also expected to be low, as their expectation about their own economy as well as the Swedish economy has deteriorated dramatically, "writes ESV.


The forecast extends to 2015. After the two heavy years 2012 and 2013 it is expected that the economy will recover and grow by 2.6 and 3.7 percent in 2014 and 2015. Then it looks at unemployment which is expected to peak at 8.4 percent in 2013, and to start going downward.

ESV emphasizes that there is considerable uncertainty, particularly with regard to the debt crisis in the EMU area.

"Given the impact on the real economy, it is difficult to predict: there is a risk that Swedish growth will be slower than expected, "wrote the ESV.

The slowdown in the economy and the labour market means that the increase in municipal tax revenue will slow. To meet the statutory balance requirement it is expected to dampen local growth rate of consumer spending. Consumption, increase will be considerably slower in 2012 than 2011 and the rise will be relatively weak throughout the forecast period, according to ESV.

Despite the weak outlook the ESV expects the state budget to be in surplus each year over the forecast period. This year, the excess would be Skr76 billion, 1 billion in 2012 and the years later, Skr14, Skr49 and Skr83 billion respectively. The surplus means that government debt is expected to continue to decline, reaching 22.2 percent of GDP by 2015.
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