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Government increasingly optimistic on the economy

Economy | 2009-11-10
Sweden’s Minister for Finance Anders Borg yesterday presented an updated economic prognosis and said that “Sweden has landed on its feet”.

The jobless rate will start to decline already next year and public finances will gradually be back to balance and surplus, but stimulus packages should continue to operate under 2010 and 2011, Borg added.

Earlier this fall Anders Borg presented the budget bill as an ‘crisis budget’ and talked about an financial ‘wolf winter’. When he yesterday held a press conference about the economic situation, words like these where absent. Instead an overall positive picture was painted, albeit with some saving clauses.

The recovery of the Swedish economy is somewhat stronger than assumed in the forecast in the Budget for 2010. This because of stronger international developments and that the financial situation has improved. But also because household wealth has increased and that uncertainty has declined among them and among enterprises.

A summary of the forecast update gives the following picture: a stronger GDP growth in Sweden in both 2009 and 2010, signs of some improvement in the labour market and a more balanced risk scenario.

Improved labour market

The Ministry of Finance´s projections suggest that the deterioration in the labour market will be slightly less than previously expected.

“The state of the labour market remains a concern, although there are signs pointing in the right direction”, Anders Borg said.

“Fiscal policy must still be directed to mitigate the effects of the crisis on the labour market and to prevent unemployment from becoming entrenched. We must continue to follow developments closely”, Borg concluded.

 

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