Brighter outlook for exports and the economy
The global recovery and relatively weak krona are helping Swedish exports pick up after several weak years. Exports are expected to increase by around 5 per cent in each of the next two years, with the result that GDP will grow by more than 3 per cent both this year and next. Such are the results of the latest forecast from the National Institute of Economic Research (NIER), published today.
Economic recovery has been held back by weak external demand hampering Swedish exports and curbing growth in activity. Higher employment, rising real wages and tax reductions have stimulated household consumption, but the saving rate has also climbed to record levels.
There are now cautiously positive signals that the global economy is improving, albeit slowly. In the euro area, the recovery appears to be on a firmer footing, thanks partly to lower oil prices and the ECB’s more resolute monetary policy response. This is good news for the Swedish labour market, and both recruitment plans and new vacancies are at high levels. Employment is therefore expected to rise by 1.4 per cent this year and continue to climb at around the same rate in 2016 and 2017. Meanwhile, strong population growth will mean that the labour force expands rapidly, and so unemployment will fall only slowly towards 7 per cent in 2017.
Fiscal policy to tighten as the economy improves
Fiscal policy has been expansionary since the economic slump began in 2008, leading to a gradual erosion of government finances. Since the government’s “krona for krona” principle is expected to be retained in the coming years, structural net lending will improve. If the public sector undertaking is to be maintained at 2015 levels, spending increases and equivalent tax increases averaging around SEK 25 billion per year will be needed in 2016-2019. Net lending will nevertheless be well below the surplus target.
For further information:
Jesper Hansson, Director of Forecasting, +46 8 453 5972
Sarah Hegardt Grant, Head of Communications, +46 8 453 5911