Swedbank Economic Outlook Update: Sweden in good position for growth, reforms needed in Baltics
Global growth is strengthening, and the effects of the financial crisis are lessening. Political risks remain a concern, with key elections imminent in Europe and uncertainty regarding US policies. Sweden is in a good position for growth given its strong public finances. While growth is also good in the Baltics, reforms will be needed to maintain it.
In the US and Europe, companies and households are in a good financial position, and both investments and consumption are rising. This is benefiting the labor market and in turn contributing to further increased consumption and stronger demand. The emerging markets are also stabilizing, and their growth outlooks have improved.
Sweden is in a good position for continued good growth despite global uncertainties. Questions remain concerning the future of EU cooperation; the outcome of upcoming elections in France, Germany and Italy; and the continued uncertainty regarding US policy for trade, energy and security. Swedish public finances remain strong, the investment climate is very good and the employment rate continues to rise. Swedish exports are gaining momentum thanks to the stronger global demand. These are among the conclusions included in Swedbank Economic Outlook Update, in which the bank’s macro analysts provide economic forecasts for 2017 and the coming years.
“The strong public finances will enable reforms in Sweden as we look ahead to the elections in 2018. We expect investment in schools, healthcare and social services. These issues, along with reforms aimed at reducing environmental impact, have been in focus during the current mandate period, and our assessment is that they will also be prioritized in the Spring Budget Bill. However, in general the reform agenda is thin,” says Anna Breman, Group Chief Economist at Swedbank.
In the Baltics, economic development strengthened towards the end of 2016, supported by recovery in investments. Domestic risks are related mainly to the labor market; if the labor shortage continues, there is a risk of wages rising faster than productivity and thus a decline in competitiveness.
“Exports and investment growth are expected to play an increasingly important role in the Baltic economies in the near future,” says Mārtiņš Kazāks, Deputy Group Chief Economist. “While the political and economic situation in Russia will continue to have an impact on the Baltic economies, it is political stability in Europe that will be critical because of the impact on overall business confidence and Europe being by far the most important export market for the Baltic countries”.
Read the full update at Swedbank Economic Outlook Update
For further information:
Anna Breman, Group Chief Economist Swedbank, phone +46 703 14 95 87
Mārtiņš Kazāks, Deputy Group Chief Economist Swedbank and Chief Economist in Latvia, phone +37 16744 58 59
Josefine Uppling, Group Press Officer Swedbank, phone +46 761 14 54 21
Swedbank promotes a sound and sustainable financial situation for the many people, households and companies. Our vision is to contribute to development “Beyond Financial Growth”. As a leading bank in the home markets of Sweden, Estonia, Latvia and Lithuania, Swedbank offers a wide range of financial services and products. Swedbank has over 7 million retail customers and around 640 000 corporate customers and organisations with 266 branches in Sweden and 143 branches in the Baltic countries. The group is also present in other Nordic countries, the US and China. As of 31 December 2016 the group had total assets of SEK 2 154 billion.
Read more at www.swedbank.com
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