Swedish economy doing good, says finance minister

Finance Minister Andersson (right) talks to journalists about the economy

Finance Minister Andersson (right) talks to journalists about the economy

The Swedish economy is on the way up and, according to the forecast, growth will gradually strengthen in the coming years. However, the situation is uncertain, not least because of developments in Greece, says Sweden’s Minister for Finance Magdalena Andersson, presenting the Ministry of Finance’s latest economic forecast at a weeklong political retreat on Tuesday.                        

“Looking around the world, we have seen increasing growth since 2013. Many factors indicate a further strengthening of growth next year. The US economy is expected to continue to grow strongly this year, despite a weak first quarter. In the euro area, we saw clear growth in all the four largest economies in the first quarter, for the first time in a long time, and conditions are in place for continued recovery. Having said that, somewhat weaker growth in China and other fast growing economies means that the global economy is gaining strength rather more slowly than we thought earlier this year,” says Minister for Finance Magdalena Andersson.

Growth in the Swedish economy in 2015 is expected to derive mainly from domestic demand, while demand from abroad remains weak. However, in connection with the expected strengthening of the international economy from 2016 onwards, net exports are expected to increase and contribute to stronger GDP growth.

The Minister for Finance particularly underlines the impact of the crisis in Greece on the Swedish economy and trends in Swedish exports and industrial production. Commentators have long been expecting a clear strengthening of industrial production, but this upswing has still not materialised. The risk of weaker international demand continues to delay the upswing.

The forecast was made at the beginning of June, when developments in Greece were included as a risk in the assessment of the future economic outlook. In light of developments in the Greek crisis in recent days, this risk has increased. However, the impact on the Swedish economy is difficult to assess.

The forecast for the public finances is somewhat lower than the assessment made in the Spring Fiscal Policy Bill. Central government expenditures are growing more slowly than in the previous forecast. However, weaker tax revenues, larger investments in the local government sector and weaker saving in the old-age pension system result overall in a rather slower rate of growth in general government net lending than forecast in the Spring Fiscal Policy Bill. Net lending/borrowing is not expected to reach balance until 2019.

“We are moving towards stronger public finances. This year we expect to reduce the deficit by more than SEK 20 billion and it will continue to shrink in the years ahead. At the same time, a delicate balance needs to be struck between ensuring the sustainability of the public finances and protecting the recovery,” says the Minister for Finance.

Swedish Government

 

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