Swedish GDP GrowthSweden has experienced strong economic growth in recent years. High investment rates and strong exports have been major contributors to growth. Conditions for future growth has been favorable in 2006 with Swedish exports benefitting from high global demand, strong company balance sheets and increase in households' disposable income.Starting in 2008, the growth has begun to slow down, mainly as a result of slower increase in exports. Falling new orders and more cautious household consumption is also expected to contribute to the slowdown. Even though higher inflation is expected for 2008, real household income will surge during 2008 and 2009, as a result of rising employment and higher wage rates according to the National Institute of Economic Research. When the uncertainty of the financial markets begin to settle, the households are assumed to start increase their consumption.Inflation is expected to increase to 3.7% in 2008 due to rises in wages, food and energy prices. Inflation in 2007 was 2.2%. In 2009 inflation is expected to be 2.8%.
Labor MarketIn 2007, the number of people employed is estimated to have increased by 2.4%. For 2008 and 2009, the increase in employment is expected to slow down with an increase of 65,000 employees in 2008 and 20,000 employees in 2009. The unemployment rate dropped rapidly from 7.7% in 2005 to 6.1% in 2007. Throughout 2008 and 2009 the decrease will slow down, and unemployment is estimated to average 5.6% each year.Political reforms have had a positive impact on employment. Reforms have contributed to an increase in the number of hours worked as a result of the reinforced tax reduction, improved rehabilitation and changes in provisions for sickness insurances.
Public FinancesGeneral government finances are not expected to weaken substantially as a result of the economic slowdown. Domestic demand and a broad tax base are estimated to affect GDP positively, while government expenditure is estimated to decrease as a share of GDP. The financial surplus, together with the planned sales of state shareholdings, are expected to sharply decrease the general government sector’s consolidated gross debt from 50.3% of GDP in 2005 to 33.0% in 2009.For a more detailed presentation of the Swedish economy and the government´s forecasts, visit www.sweden.gov.se......................................................* If not mentioned, GDP measures are at market prices.** This text is based on the National Institute of Economic Research’s forecast from January 2008.