New macro forecast: Divergence at the global level and in Sweden
The Swedish economy continues to perform well. Growth is high and employment is rising. But there is no shortage of challenges. In Sweden, there is uncertainty regarding the outcome of the forthcoming parliamentary election, and the Riksbank is hesitating as to whether to hike the repo rate for the first time since 2011.
The Swedish election will probably produce a complicated parliamentary situation, but we believe that this will eventually lead to the formation of a minority government involving either the Social Democrats or the Moderates. And although we may see an increase in volatility on financial markets as a result of the outcome, we don’t foresee any lasting effects. Read more about this in our in-depth look at the election: “Swedish election – how will the economy be affected?”
Opinion among the Riksbank’s Executive Board is divided, and the inflation outcome in the autumn will be crucial to when the repo rate is hiked. We believe that the Riksbank will hike the repo rate in December, but that the rate will not go above the zero level until the latter part of 2019.
In the global economy there are a number of new geopolitical clouds on the horizon, but so far, the international economy is still performing relatively well. Compared with 2017, there is now a greater divergence between countries and regions. Our assessment last spring that the global economy will peak this year remains in place, and we expect a slowdown in 2019 and 2020. For Sweden, lower housing investments and a weaker business environment will mean slower growth.
Elsewhere, geopolitical risks such as trade wars, Brexit and instability in Turkey dominate. We expect Sweden and the Nordic region to cope with the current trade conflict, but if it were to be expanded to include duties on cars, or escalate into a global trade war, smaller countries such as those in the Nordic region risk being harder hit. Read more about this in our in-depth analysis: “Trade conflict – How is the Nordic region affected by trade conflicts?”
For further information, please contact:
Ann Öberg, Chief Economist, +46 8–701 28 37, +46 76–135 58 15
Christina Nyman, Head of Forecasting, +46 8–701 51 58, +46 70–778 77 65
For more information about Handelsbanken, see: www.handelsbanken.com
For the full report in Swedish, see Makroprognos
For the full report in English, see Global Macro Forecast
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