Economic outlook - September 2016
The Swedish economy grew quickly in 2015 and GDP growth is expected to be strong in 2016 as well. The labour market is strong, the employment rate is rising and unemployment is gradually declining. Net lending will increase in the years after 2017 and the large deficit the Government inherited has essentially been wiped out.
The forecast was published in the Budget Bill for 2017 submitted to the parliament September 20, 2016.
Continued strong GDP growth
The Swedish economy grew quickly in 2015 and GDP growth is expected to be strong in 2016 as well. Growth is very high in relation to comparable countries and more than twice as high as the EU average. This relatively high growth can be partly explained by a positive trend in business-sector investment and household consumption. Resource utilisation is considered to be essentially in balance, and more normal levels of growth are expected in the coming years.
Good labour market prospects
Since the Government took office, developments in the labour market have been strong. Employment has increased, with 120 000 more people in jobs. The employment rate is higher than before the financial crisis and the highest in the EU. Youth unemployment and long-term unemployment have fallen. Growing demand in the economy and the Government's reforms are expected to contribute to continued positive growth in employment and to a drop in unemployment to 6.3 per cent in 2017.
Great uncertainty in the rest of the world
Growth in the rest of the world is expected to increase in 2017, but uncertainty about the macro-economic outlook is high. Growth may be weaker than forecast if, for example, growth in the euro area slows. The result of the referendum in which the United Kingdom voted to leave the EU adds to this uncertainty. There are also risks in the rest of the world associated with the high numbers of people fleeing to Europe. Economic growth may be even stronger than forecast. It is difficult, for example, to assess developments in China and many other emerging economies. Stronger growth in emerging economies would lead to higher Swedish export growth.
Gradual strengthening of public finances
Since it entered office, the Government has pursued a tight fiscal policy, substantially reducing the deficit in general government net lending since 2014. Net lending will be strengthened substantially up to 2020. General government net lending will have been reinforced by more than one per cent of GDP between 2014 and 2016, and is expected to be close to plus/minus zero in 2016. Net lending will deteriorate again somewhat in 2017, primarily as a result of temporary factors. In the years following 2017, net lending will be strengthened continuously and will be above the surplus target level at the end of the forecast period.
About the forecast
The forecast for economic growth in Sweden and the world extends until 2020. In this forecast, information that was available up to 8 August 2016 has been taken into account. The forecast is based on current regulations and reforms proposed and announced by the Government in the Budget Bill for 2017.