The recent waning of Swedish export demand has brought the economy further in line with global economic fundamentals. In addition, domestic demand is weakening as investment activity slows and consumers trim spending amid concerns over employment and the housing market. Tina Mortensen of Citi Research analyses many aspects of the Swedish economy, focusing in particular on exports, the job market, fiscal policy, household debt, investment and the monetary policy outlook. The author notes that despite a loss in momentum on the back of dwindling export growth and increasing unemployment, Sweden is still likely to outshine most of Western Europe in 2013 and 2014. Additionally, she points out that the Swedish government will have to decide whether to maintain its current policy stance or loosen fiscal conditions. The author concludes that the central bank will likely cut interest rates soon.
This article was featured in a recent issue of Current Economics. You can download a sample at www.consensuseconomics.com.