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Swedish economy defies crisis

Economy | 2012-06-06
Despite the euro crisis, the Swedish economy is relatively strong. The latest economic indicators show that the country has avoided a formal recession and that the economy is doing better than expected.


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Gross domestic product expanded 0.8 per cent in the three months through March after contracting a revised 1.0 per cent the previous quarter, according to Statistics Sweden, thus avoiding a formal recession (two quarters of declining GDP on a quarterly basis). Annual growth accelerated to 1.5 per cent from a revised 1.0 per cent at the end of 2011.

The wider crisis in Europe has thus not succeeded in killing growth in Sweden. The domestic market have been strong in a country mostly known for its large export market.

The National Institute of Economic Research (NIER) is about to adjust its forecast for growth in the Swedish economy upwards. In March the government agency predicted a growth of 0.4 per cent in 2012, but now it's probably around one per cent.

"The economy has done better than we expected with a stronger employment and falling unemployment," forecast manager Jesper Hansson tells business daily Dagens Industri.

This does not mean that the crisis in Greece and Spain has not made any mark on the numbers. Both consumer and business confidence is falling and it makes a lasting impact in demand (press release).

The main scenario of the NIER is, however, that Europe can do from a complete collapse, and that the United States and China can continue to pull the world economy

"The weakening we have seen signs of in the U.S. we see as a temporary pothole. Basically, we believe that the U.S. economy is recovering and that it can help Sweden ", says Jesper Hansson.

Also bank SEB believes that Sweden will manage fairly good despite the crisis.

“Things look pretty good on the surface . The outside world has great confidence in the Swedish economy, reflected in the desire to invest in Swedish interest rates and the Swedish Krona. Both Swedish households and companies has managed to withstand the crisis in the world quite well, " says Håkan Frisén, head of forecasting at SEB, to Dagens Industri.

But he stresses that Sweden is doing well only in comparison with the rest of Europe. We are still talking about a weak economy. 

"Compared to southern Europe, we have a strong economy, but we are still going through a classic weak economic climate."

The main scenario of SEB is a continued weak growth in Sweden, however, without the country suffering negative growth, and that Europe is able to avoid a total crash. 


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