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Sweden: Country Economic Forecast: 09 Aug 2013

9 Pages Oxford Economics August 09, 2013 SKU: OFE5097487

Sweden: Country Economic Forecast: 09 Aug 2013

GDP edged down 0.1% on the quarter in Q2 2013. The initial flash estimate confirmed that external demand and investment were weak but consumer spending was also subdued. The latter was a surprise given the strength seen in the retail sales, consumer confidence and employment data, and we expect an upward revision to the private consumption data in September. Looking ahead, healthy domestic economic conditions should help to offset weak external demand. The unemployment rate actually declined in Q2 for the first quarter since Q3 2011. And the latest Riksbank business survey suggests that job cuts in most sectors have come to an end and that companies are now cautiously optimistic about future developments. Overall, we expect GDP growth of 1.1% this year and 1.9% in 2014. In early July, the Riksbank decided to hold interest rates at 1% as they continued to balance below-target inflation against high household debt levels. We expect interest rates to start rising in Q3 2014. Meanwhile, the risks to the forecast remain skewed to the downside. Although the threat of a Eurozone break-up has receded since mid-2012, a sharp rise in uncertainty could easily derail recent gains in confidence. In addition, the expected recovery in exports could be limited by a potentially stronger SEK, as we expect the Riksbank to start tightening monetary policy well before the ECB

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Sweden: Country Economic Forecast: 09 Aug 2013

Oxford Economics
August 09, 2013

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