Highest Employment in 20 Years

The strong recovery of the Swedish economy is continuing, and the employment rate will rise to a level unsurpassed in 20 years. Unemployment, however, will still be high. It will therefore be appropriate to keep monetary and fiscal policies expansionary. This is shown in the NIER’s latest forecast, published today.

The labour force will continue to grow in 2011-2012, in part because of an expanding population and the increasing number seeking to enter the labour market. In the next two years the number employed will rise by 160 000, and the employment rate in 2013 will be the highest in 20 years. But with the inflow into the labour market, unemployment will still be relatively high, almost 7 percent at the end of 2012. In the current recession, both the number of long-term unemployed and unemployment among the least educated have risen sharply. It will be important to keep an eye on this worrisome tendency in the period ahead.

Economy expands at a healthy rate, but still below full capacity

The vigorous development of Sweden’s economy is due to a combination of factors. The fundamental one is a strong financial position in both the private and public sectors, making it possible for consumption as well as investment to increase. Moreover, the development of the world market remains favourable to Swedish exports. Economic policy will also help by contributing to high growth in 2011-2012. Although the repo rate will be raised to 3 percent by the end of 2012, the monetary policy can be seen as expansionary for the entire forecast period. Fiscal policy, too, will be expansionary, and the Government is expected to allocate unfunded measures of SEK 5 billion in 2011 and SEK 25 billion in 2012, in excess of measures previously decided.

It will be appropriate to maintain the expansionary stance of monetary and fiscal policies in view of the low level of resource utilization in the form of idle labour and spare capacity at firms. The Swedish economy is strong, but still far from booming. As a consequence, underlying inflationary pressure will be lower than normal during the forecast period.

More money left over to spend on consumption

Household consumption rose by 3.5 percent in 2010, and the increase will be somewhat greater still in 2011-2012. This period may therefore be regarded as one of historically strong growth in consumption. The willingness of households to consume is explained by the combination of a high level of saving at the outset and a forecast average annual increase of 3.5 percent in disposable income in 2011–2012.

For further information:

Jesper Hansson, Director of Forecasting, +46-8-453 59 72
Sarah Hegardt Grant, Head of Communications, + 46-8-453 59 11, +46-70-267 80 41