US will make a hard landing and Sweden a soft landing

US will make a hard landing and Sweden a soft landing The Swedish slowdown will be modest, according to a new report by SEB's economists After a hard US landing, America's economic curve will be U-shaped. The Fed will slash its key rate to 4.25 per cent before autumn. Recovery will come late this year, but GDP growth will not return to boom-year levels. Growth in 2001 will be 1.6 per cent, next year 2.3. The American stock market may decline further, before the Fed's rate cuts convince the market that a recovery is on the way. Sweden is affected more than many other European countries by the American deceleration. But the weak krona provides support for exports. Due to strong employment, tax cuts and rising disposable income, the slowdown will be modest. Sweden will make a soft landing, with 3.0 per cent GDP growth this year and 2.8 per cent in 2002. Half of this year's wage round remains. In the domestic sector, pay demands are unrealistically high and labour disputes are likely before collective agreements are reached at levels consistent with price stability. Inflation is gradually climbing, partly due to import prices. But good productivity growth, lower oil prices and deregulation will help keep it just below the 2 per cent target. The Riksbank (central bank) will leave its repo rate unchanged at 4.0 per cent all year You will find SEB's Nordic Outlook - an economic outlook for the coming years -on www.seb.net under the headline Newsletters. SEB has 630 branch offices in Sweden, Germany and the Baltic States, with 4 million customers in total. Of these, 850,000 are Internet customers. SEB also has operations in the rest of the Nordic countries, Great Britain, Luxembourg and Switzerland. The balance sheet total is SEK 1,123 billion and assets under management amount to SEK 910 billion. The number of employees amount to 21,500. Read more about SEB: www.seb.net For further information, please contact: Klas Eklund, Chief Economist, +46 8 763 80 88 Anders E Borg, Head of Economic Research, +46 8 763 80 64 Boo Ehlin, Corporate Press Manager, +46 8 763 85 77, +46 70 763 85 77 ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/03/06/20010306BIT00740/bit0002.doc http://www.bit.se/bitonline/2001/03/06/20010306BIT00740/bit0002.pdf