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The Swedish economy
Statistical perspective
From the contents:
Economic crunch boosts household
savings.....
page 3
The gross domestic product (GDP) for the fourth quarter of 2008
showed the largest decrease since the first quarter of 1993. Both
exports and imports developed very unfavourably. The drop in
household consumption coupled with the continued increase of
disposable income resulted in record high household savings.
......which cut Swedish GDP growth
page 7
Households’ disposable income developed positively last year.
Nevertheless household consumption fell, resulting in an all-time
high (since the 1960s) savings ratio. A remarkable increase occurred during the fourth quarter of 2008 compared to the corresponding quarter one year earlier. The savings increase corresponds to
a considerably lower consumption demand, thereby contributing
to the fall of GDP by about one percentage point.
Statistics suggest a relatively
well-functioning credit market
page 20
The financial crisis developed very quickly into a real economic
crisis which almost immediately had an impact on demand,
investment and growth. The drop in Swedish GDP is an expression of this. Paradoxically, however, the crisis is not reflected as
clearly in the financial statistics. At an aggregate level, the effects
on banks and corporate balance sheets are so far relatively small.
Number 1•2009
Table of contents
Summary.................................................................. 3
International outlook................................................. 4
Exports and imports.................................................. 5
Household savings.................................................... 7
Household consumption........................................... 9
Government consumption...................................... 11
Gross capital formation........................................... 12
The business sector................................................. 15
Labour market......................................................... 17
Financial crisis as seen in statistics.......................... 20
The Swedish economy – published March 2009
Summary
Economic crunch boosts household savings
as well as an increase of real household disposable income
of slightly more than 1 percent resulted in an extremely
high household savings rate of 7.4 percent of disposable
income.
The gross domestic product (GDP) for the fourth quarter of
2008 showed the largest decrease since the first quarter of
1993, compared to corresponding quarter of the previous
year. Both exports and imports developed very unfavourably. The drop in household consumption coupled with the
continued increase of disposable income resulted in record
high household savings. The rapid decline of inventories
held back GDP growth as well.
Household savings rate
Percentage of disposable income. Fourth quarter
for each year
8
6
During the fourth quarter of 2008 gross domestic product
was 4.9 percent lower than the corresponding quarter of
2007. Consequently, GDP for all of 2008 also went down.
GDP fell by 0.2 percent, which was a far worse outcome
than predicted at the beginning of the year. However, the
figure for the entire year is less informative than usual . Due
to the gradually deteriorating economy during 2008, the status of the economy at the end of the year was quite different
from the beginning. Compared to the third quarter, the decline of the seasonally adjusted GDP the fourth quarter was
2.4 percent. Nevertheless, this figure must be treated with
some caution since seasonal adjustment works less well
when there are sharp fluctuations in the economy.
4
2
0
-2
-4
-6
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Data up to and including 2008
Source:Nationalaccounts
Gross fixed capital formation was comparatively stable and
only decreased by approximately 1 percent. There was a
continued changeover to investments financed by leasing.
In the fourth quarter a decrease of inventories could be
noted and this contributed markedly to the contraction
of GDP. A deteriorating economic situation often leads to
larger stocks of finished goods, which was also the case for
the manufacturing industry this time. Even stocks of intermediate goods increased. However, the lower production
level led to much smaller stocks of work in progress compared to the fourth quarter of 2007. In total, this had a strong
negative effect on GDP growth.
The extremely poor GDP growth was mainly marked by
a gradually weakening global demand. During the fourth
quarter when the financial crisis started to affect the real
economy in a more obvious way, exports of goods came
to a complete halt. Exports decreased by a full 10 percent
compared to the fourth quarter of 2007. This is the largest
drop since 1980, i.e. during the whole period for which
quarterly figures are available on foreign trade in the national accounts. The global financial crisis has hit investment
activity very seriously. This has affected the Swedish exports
especially strongly, since exports to a large degree consist
of investment goods. Exports of cars contributed the most to
the decline. Imports of goods were also down sharply but
not as much exports. As a result, net exports held back GDP
growth.
The lower global demand has to a large degree affected the
passenger car industry which constituted a large part of the
total drop in production in the manufacturing industry. The
chemical industry continued to perform reasonably well.
Among service producers, value added has fallen the most
in the trade industry.
Household consumption decreased by slightly more than
3 percent. This was the first downturn since 1993, with the
exception of marginal decreases in the fourth quarter 2001
and the third quarter of last year. This reduced consumption seems to stem from psychological reasons rather than
lower household income. Influenced by the severe economic state, households have reduced their spending and
have started to act more cautiously. During the latter part
of 2008, The Economic Tendency Survey, produced by the
Swedish National Institute of Economic Research, has pointed at much greater uncertainty among households about
both the economic situation in Sweden and the economy of
households. In the fourth quarter, the drop in consumption
So far the lower economic activity has not affected employment to any large extent. The previous strong employment
growth came to an end during 2008 and employment showed signs of a decrease from the third to the fourth quarters.
Unemployment also revealed an unfavourable tendency
and increased somewhat from the third to the fourth quarter,
seasonally adjusted. Figures for January 2009 confirm these
tendencies. Notices of lay-offs increased sharply at the end
of 2008 and this may affect employment and unemployment with some delay.
The Swedish economy – published March 2009
International outlook
The world economy contracts
downwards in the prices of goods and services generally
follows. A development like this also appears in the OECDcountries during the end of 2008, when the growth in prices
was held back. The fourth quarter showed a growth in
consumer prices by 2 per cent on average compared with
the same period the year before, as opposed to the pace of
four per cent during the beginning of last year. The growth
in prices was lower in the G7 countries than in the OECD
as a whole. Turkey followed the same inflation pattern as
most other countries, but with the exception of beginning
from a much higher level. On the other hand, Iceland
started out with a growth in prices by 4 per cent that soared
up to 20 per cent towards the end of the year. This development clearly indicates that the Icelandic crisis is profound.
The withheld demand has also led to heavy reductions in
the world market prices of crude oil. A lower level of oil
prices may have favourable effects on both households and
industry.
Total demand, illustrated by the trend in GDP, weakened
markedly during the first quarters of 2008. This development was followed by a decrease in economic activity in
a narrow group of countries in the third quarter and in a
wider group during the fourth quarter.
Earlier, there has been a recognisable chain of time lags
among changes in economic activity over the world. However, right now this does not manifest itself as clearly as it use
to, since countries from several continents seem to experience similar economic turns.
GDP growth and inflation in the OECD countries
Percentage change from corresponding quarter
previous year
3.0
GDP
CPI
2.5
5
2.0
1.0
3
0.5
0.0
-1.0
-1.5
As an effect of the general economic state, the development
on the national labour markets continued to deteriorate
during the fourth quarter of 2008. However, this change is
normally slower than the change in GDP and appears with
a time lag. Last December, 6.8 per cent of the labour force
in the OECD countries was unemployed. In Europe this
share is somewhat more than one percentage point higher.
Norway, South Korea and the Netherlands are superior in
this with unemployment rates as low as about 3 per cent.
Not only are there few persons unemployed in the Netherlands, but its labour market has not yet been particularly affected by the otherwise fully obvious economic downturn2.
4
1.5
-0.5
6
2
GDP US
GDP EU
Inflation US
Q 1 2008
Source:OECD
andEurostat
Inflation G7
Inflation OECD – Europe
Inflation OECD – Total
Q 2 2008"
Q 3 2008
1
Q 4 2008
0
Data up to and including fourth quarter 2008
The drop in the United States GDP can mainly be explained
by reductions in investments and household consumption.
The president’s plan Making Home Affordable, aiming at
refinancing or modifying the mortgages of homeowners,
may be considered a small ray of light in the American
economy1.
Haugh et al (2009) have studied the macroeconomic consequences of financial crises originating from the banking
sector3. Those crises have led to larger losses in production than general economic downturns. Furthermore, both
investments by firms and households (in houses) tend to
diminish more than proportionate. Exports have played
an important role in the recovery after these earlier crises,
partly due to the depreciation of the currency. Given this
historical background, the prevailing state of the world
economy could be considered troubled.
Even Germany, the largest export market of Sweden, showed significant downturns in economic activity during the
fourth quarter last year. Above all else, the exports contributed to this development. However, while Swedish exports
to Germany continued to decrease, a general increase in
German imports could be detected. This indicates that Sweden is losing market shares in Germany. Contrary to most
other countries, Norway, the second largest trade partner
of Sweden, managed to retain its GDP-growth in the fourth
quarter. Nevertheless, it is striking that among the OECDcountries only Japan reported a stronger fall in economic
activity than Sweden. Both in the European Union and in
the United States the economic activity in general contracted more slowly than in Sweden.
Contact persons: Eva Hagsten, 08-506 942 27 and
Tomas Thorén, 08-506 941 46
1 http://www.financialstability.gov/makinghomeaffordable/
2 The background information to this paragraph comes from the OECD
labour market statistics: http://stats.oecd.org/wbos/Index.aspx?QueryN
ame=251&QueryType=View&Lang=en
3 David Haugh, Patrice Ollivaud och David Turner (2009) The Macroeconomic consequences of banking crises in OECD countries, OECD
Working Paper No 683, OECD, March.
When there is a decrease in overall demand, an adjustment
The Swedish economy – published March 2009
Exports and imports
Drop in exports of goods reduced GDP
contribution to GDP growth by exports was –2.2 percentage
units. This was the first time during the last five years that
the import-adjusted calculations showed a negative effect
from exports, and the second time that contributions from
import-adjusted exports were lower than exports not adjusted for imports. It was also a considerably larger negative
contribution than from import adjusted change in inventories and household consumption. Import adjustment means
that instead of calculating effects from net exports (where
imports on GDP growth are deducted from exports only) the
total effect is distributed among the items on the expenditure side of GDP, according to their import content.
The international slowdown in the economy has hit investments hard. As a consequence, Swedish exports have been
hit hard, since investment goods constitute a large part of
the exports. Both exports and imports were down sharply
during the fourth quarter, most notably as a result of the
drop in trade of goods. Foreign trade had a considerably
negative effect on GDP growth, because exports fell more
than imports. The large decrease of exports of goods to the
United States in recent years is mainly caused by lower
exports of pharmaceuticals and passenger cars.
Swedish foreign trade continued downwards last year
because of a drop in international demand. Net exports in
the fourth quarter held back GDP growth by 1.3 percentage
points. The reason was the sharp drop in exports of goods
which amounted to slightly more than 10 percent compared to the corresponding quarter of 2007. At the same
time imports of goods also declined substantially, but at a
somewhat slower rate than exports of goods. Trade in services gave no support as both exports and imports of services
were comparatively unchanged during the fourth quarter.
However, trade in services, because of its better development than trade in goods, led to less of a downturn for total
exports and imports.
Exports dropped by 3.8 percent during the fourth quarter
compared to the previous quarter. This is a substantially
lower growth rate compared to the preceding two quarters,
when GDP fell by about 1 percent. The decrease of imports
was also larger, but the drop was a little more moderate or
2.9 percent.
In spite of the large drop in the fourth quarter, exports
increased somewhat for all of 2008. At the same time, imports increased more rapidly than exports and for 2008 net
exports contributed –0.4 percentage points. The import-adjusted contribution from exports was 0.1 percentage points.
Decline on all large export markets
Contribution to GDP growth from exports
Because Swedish exports of goods rely heavily on investment goods, Swedish exports have been hit more severely
than the exports of many other countries. Statistics on
foreign trade of goods, measured in current prices, show
that exports of motor vehicles, metals and machinery and
equipment have decreased for the fourth quarter, compared
to the corresponding quarter of 2007. Motor vehicles and
machinery are by far the two largest commodity groups in
Swedish exports. Therefore the decline had a considerable
effect on total exports.
Percentage points
4
Exports,
import adjusted
3
2
1
0
-1
Net exports,
unadjusted
-2
-3
2003
2004
Source:National
accounts
2005
2006
2007
The drop in demand during the fourth quarter was very
distinct on all the large export markets. The decline of exports to the United States, Denmark and Norway was most
visible, while the drop was less to Germany and the United
Kingdom. The drop on the German market seems to have
speeded up from the third to the fourth quarters.
2008
Data up to and including fourth quarter 2008
The large negative effect on GDP growth is not unique.
During 2007 net exports had almost the same, or even
larger, effect on GDP growth during the first as well as the
third and the fourth quarters. The negative effect from net
exports during the fourth quarter of 2008 coincided with
an even larger effect from both inventories and household
consumption, which led to the considerable drop in GDP.
The importance of the different export markets seems to
have been largely unaffected. Germany and Norway are
still the two largest destinations for Swedish exports. The
United States, which was the largest export market as recent
as 2005, has lost much importance during recent years.
The demand for Swedish exports on the American market
has fallen more rapidly than on other large export markets.
Exports show a very clear picture of concentration, and
the five countries Germany, Norway, Denmark, United
Kingdom and the United States constituted more than 40
According to alternative calculations of contributions to
GDP growth, where the different items on the expenditure
side of GDP have been adjusted for import contents, the
The Swedish economy – published March 2009
to the United States peaked in 2005, it was maintained in
2006 by a sharp increase in exports of pharmaceuticals. In
2007 the demand for Swedish pharmaceuticals decreased
substantially. This resulted in a lower level for exports of
pharmaceuticals, which coincided with a drop in the Swedish production of pharmaceuticals. The drop continued
during the first three quarters of 2008, compared to the
corresponding quarters of the preceding year. A recovery
took place during the fourth quarter of 2008 when exports
of pharmaceuticals counteracted the fall of the total exports
to the United States.
percent of the Swedish export market for goods in 2008.
Percentages of total exports of goods
14
12
United States
Germany
10
8
6
4
Norway
United Kingdom
Denmark
In 2007 and 2008, total annual exports to the US decreased
by SEK 22 billion – from more than SEK100 billion to
slightly less than 80 billion per year. Pharmaceuticals accounted for 9 billion of the total of 22 billion. This means
that the exports of pharmaceuticals to the United States fell
by almost 50 percent in two years. Most of the decline occurred in 2007. However, the drop took place from a very
high level. In 2008 the drop of exports to the United States
continued, but mostly as a consequence of a very substantial drop in the exports of passenger cars.
2
0
98 99 00 01 02 03 04 05 06 07 08
Data up to and including 2008
Source:Foreigntradestatistiscs
Pharmaceuticals a large part of the rise and
fall of exports to the United States
The fall from the top ranked destination country for Swedish exports for the United States took place at the same
time as the start of the slowdown of the American economy
a couple of years ago. However, the drop in demand for
Swedish goods has mainly hit two commodity groups:
pharmaceuticals and passenger cars. Since exports of goods
Contact person: Tomas Thorén, 08-506 941 46
Contributions to GDP growth
The modified calculation shows that the weak export has the
largest withholding effect on GDP growth. It contributes to almost
half of the GDP decrease. The importance of household consumption and change in inventories will be somewhat reduced
according to this calculation method.
In 2008 GDP growth was –0.2 percent, while growth for the
fourth quarter was –4.8 percent (not calendar adjusted). Volume
growth for the different items on the expenditure side of GDP
and their contributions to GDP growth can be seen in the table
below from 2007 to 2008, as well as for the fourth quarters of
both years.
A corresponding calculation can also be done for GDP with the
production approach. In this case the contributions to total value
added from different industries are calculated. The result for the
fourth quarter 2008 is shown in the table below.
Contributions to GDP growth 2008
Volume growth, Contributions, percentage
percent Traditional method Import adjusted
Q 4 2008 Q 4
2008
Q 4
2008
Househ. cons. –3.3
Govt. cons.
0.1
Gross cap. form.–1.2
Change in invent. .
Net exports
.
Exports
–7.2
Imports
–5.4
GDP
–4.8
–0.2
1.3
3.5
.
.
1.7
3.0
–0.2
–1.5
0.0
–0.2
–1.8
–1.3
–3.8
2.5
–4.8
–0.1
0.3
0.7
–0.7
–0.4
0.9
–1.3
–0.2
–1.1
0.0
–0.1
–1.4
.
–2.2
.
–4.8
The production of goods and of services had approximately the
same effect on GDP growth. For the entire year of 2008, it was
the production of goods, and above all the manufacturing industry, that held back GDP growth. The large effect from taxes on
production for the fourth quarter is due to the sharp drop in household consumption that affected the value added tax.
–0.3
0.2
0.2
–0.5
.
0.1
.
–0.2
Contributions to GDP growth from different industries
Value added production of goods
– of which manufacturing industry
– of which construction
Value added production of services
– of which trade. hotels. restaurants
Value added total
Taxes on production
Subsidies
GDP
The first two contribution columns show the contributions from
the different items on the expenditure side, calculated according
to the traditional method, where corrections have been made according to the import content in different items. Demand within
each component relates to a larger or smaller share of imported
goods. By using the input-output tables for the year 2005, an
adjustment can be made according to the import content in
demand, and the contribution from Swedish production to GDP
growth can be calculated1. The distribution of imports among the
different components results in a more accentuated contractive
effect from exports, while the negative contributions from other
items are moderate. This is because imports declined sharply and
thus gave a positive contribution to GDP growth.
The Swedish economy – published March 2009
Contributions, percentage points
Q 4
2008
–2.1
–2.1
0.0
–2.2
–1.2
–4.3
–0.6
0.0
–4.8
–0.4
–0.6
0.1
0.2
0.0
–0.2
–0.1
0.1
–0.2
1 For more information about these calculation methods, see the Swedish economy – statistical perspective number 1 2007.
Household savings
The financial crisis affects consumer and savings patterns
Increased household savings cut Swedish
GDP growth
One important explanation of the sharp rise in savings is
of course the current crisis in the economy. Worries for expected consequences in the form of increased warnings of
unemployment and decreasing asset prices (stock exchange
and real estate) have probably contributed to the “abnormal” behaviour; namely, that households do not consume
income increases as they usually do. At the same time it is
worth mentioning that the savings concept in the national
and financial accounts is not the same thing as the liquidity
buffer that can immediately be used for consumption of
goods and services. Firstly, a considerable amount is the
real savings, i.e. net acquisition of non-financial assets (real
estate, machinery, equipment). This component is fairly
stable over time. Secondly, changes in pension fund reserves are a major part of households’ savings with almost no
liquidity at all. Thirdly, as an effect of the accrual basis used
in the national accounts, some changes in taxation rules
have not yet had a full monetary effect for the households
and they may not be aware of the full income picture.
Households’ disposable income developed positively last
year. Nevertheless household consumption fell, resulting in
an all-time high (since the 1960s) savings ratio. A remarkable increase occurred during the fourth quarterof 2008
compared with the corresponding quarter one year earlier.
The savings increase corresponds to a considerably lower
consumption demand, thereby contributing to the fall of
GDP by about one percentage point.
Increased salaries, lowered taxes and an improved net
balance of property income led to a 6 percent increase of
households’ disposable income in 2008 (at current prices).
At the same time consumption diminished in absolute
values. The savings ratio thus rose to almost 12 percent of
households’ disposable income, the highest level recorded
in the statistics since the 1960s.
Household savings rate
Percent of disposable income
14
12
Amortizations behind slower debt growth?
10
Another factor that “locks” savings are amortizations on
household liabilities. During the fourth quarter the lowest
debt growth for a fourth quarter since 2003 was recorded
in the statistics. Households’ outstanding stock of liabilities thus increased SEK 37 billion during the fourth quarter
compared with an increase of 57 billion the corresponding
quarter of 2007. However, it is not possible to draw any
decisive conclusion about the amount of amortizations
since the slower debt growth could also be the effect of
fewer new loans due to lower turnover and falling prices
on the housing market. A conceivable scenario could be
that the earlier high interest payment has been exchanged
into increased amortizations with no immediate effect on
households’ propensity to consume.
8
6
4
2
0
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Data up to and including 2008
Source:Nationalaccounts
The household sector’s choice between savings and consumption has a great impact on economic growth and employment, in particular on a short-term basis. The national
accounts statistics of the fourth quarter 2008 is a telling
example. The households’ savings ratio at that time rose by
more than 4 percentage points to 7.4 percent of disposable
income (compared with the same quarter in 2007). The increased savings imply a corresponding loss of consumption
demand. The contribution to the drop in GDP was about
one percentage point.
According to traditional economic theory there are different
motives behind households’ short-term savings (inflation adjusted yield, keeping a buffer etc.), Similarly, demographic
factors are important in a long term perspective.
The Swedish economy – published March 2009
... but a consistent savings picture during the
fourth quarter
Some important income and expenditure items in the
household sector
Fourth quarter 2008 and changes compared with fourth
quarter 2007
Wages and salaries
Pensions. social benefits
Operating surplus etc.
Income taxes
Capital taxes
Interest income
Interest expenditure
Disposable income
Consumption
Saving 1
Saving in pension
fund reserves
Saving 2
Savings ratio 1
Savings ratio 21
Gross capital formation
Net lending
Net lending according
to the financial accounts
Financial assets
Liabilities
Level
326 SEK billions
134 SEK billions
62 SEK billions
–114 SEK billions
–2 SEK billions
7 SEK billions
–30 SEK billions
378 SEK billions
–375 SEK billions
3 SEK billions
However, in the fourth quarter of 2008, both the level
and the change of net lending are fairly consistent in the
two ways of calculation. This is valuable for the economic
analysis. Household income, expenditure, savings and how
they have saved can then be studied simultaneously. The
high savings rate is consequently reflected in the quarterly
statistics on household financial assets and liabilities (Sparbarometern). These statistics show a fourth quarter record
figure for households’ net lending. Liabilities increased
slower and financial assets higher than normally.
Change
3.1 2.4 –1.3
–4.1 10.9 8.9 18.7 4.6 –0.3 18 %
%
%
%
%
%
%
%
%
mdr
27 SEK billions
30 SEK billions
0.8 %
7.4 %
21 SEK billions
27 SEK billions
–2.7 %
18 mdr
4.8 % points
4.3 % points
5.8 %
26 SEK billions
32 SEK billions
69 SEK billions
–37 SEK billions
23 SEK billions
14.2 %
–30.0 %
Household financial assets and liabilities
Fourth quarter 2008. Change compared to
corresponding quarter previous year. Billion SEK
80
60
Assets
Liabilities
40
20
0
Statistical uncertainty …
-20
However, it should be pointed out that the calculations of
income and savings in the national and financial accounts
are subject to uncertainty. For instance, in the national
accounts, income from the hidden economy etc. (mixed
income) is estimated roughly at 5 percent of GDP. Further
there are some problems with periodizing interest. The
most important uncertainty is nevertheless the normally bad
correspondence between the non-financial and financial
accounts as regards the calculation of net lending.
-40
-60
1996
1998
2000
Source:Financialaccounts
2004
2006
2008
Data up to and including 2008
Contact person: Bo Bergman, 08-506 945 42
1 The official savings ratio
The Swedish economy – published March 2009
2002
Household consumption
Household consumption
Households postponed their consumption
NPISH1 excluded. Percentage change from
corresponding quarter previous year
Household consumption fell by 3.3 percent in volume in
the fourth quarter of 2008, compared to the same quarter
last year. At the same time savings rose substantially. This is
the lowest quarterly consumption development in 15 years.
Household purchases of passenger cars contributed the
most to the decline. Household consumption expenditures
affected GDP growth downwards by 1.1 percentage points,
adjusted for imports.
8
6
4
2
0
As described in the section about household income and
savings, the large reduction of household consumption in
the fourth quarter was because households chose to save a
much larger share of their disposable income than before.
Households’ opinions about the economic situation, both
for the household and for the total Swedish economy, was
for the fourth quarter 2008 the gloomiest since 1993, according to the Consumer Confidence Indicator produced by
the National Institute of Economic Research. Households
experienced to a higher extent that it was the wrong time to
buy capital goods and to renovate their homes. Meanwhile
the apprehension of becoming unemployed rose. According
to the Labour Force Survey the number of employees was
unchanged during the period, while the number of notices
of lay-offs rose. The number of notices of lay-offs was four
times as high in the fourth quarter as in the third quarter of
2008. This was one of the factors that may have contributed
to creating worries among households when uncertainty
about future income increased.
-2
-4
-6
-8
81
84
87
Source:National
accounts
90
93
96
99
02
05
08
Data up to and including fourth quarter 2008
Low demand for cars
The single biggest cut in demand from households affected
passenger car sales. From May 2008 onwards, the number
of newly registered cars bought by companies and households fell compared to the same month the previous year
for every single month. The biggest drop during 2008 occurred in the fourth quarter when as much as 35 percent fewer
cars were registered. More than half of the drop is explained
by lower household consumption as companies’ consumption/leasing is more robust over time.
New registrations of passenger cars
Lowest consumption growth in the last 15
years
Thousands
40
Real household consumption expenditures, NPISH excluded, fell by 3.4 percent in volume terms in the fourth
quarter of 2008 compared to the corresponding quarter of
the previous year. This is the greatest volume decrease a
single quarter since the last financial crisis back in 1993.
Then consumption fell by as much as 6.9 percent. A reason
behind that crisis was the interest rate shock caused by
the tax reform which took place in 1990–1991, affecting
households with heavily mortgaged estates severely. A real
interest rate increase made consumption less desirable and
household savings rose tremendously.
35
2006
2007
2008
2009
30
25
20
15
10
5
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Data up to and including February 2009
Source:SwedishInstitute
forTransportandCommunicationsAnalysis
A decline in household consumption for two quarters in a
row has not occurred since the beginning of the 1990s. The
IT crash in the beginning of the 21st century did not influence consumers to the same extent. At most consumption
decreased by 0.4 percent. The development of household
consumption after the IT crash has been smoother and lacks
the consumption peaks that can be seen in the years before
the IT-crash and in 1986 and 1987.
Household purchases of cars decreased enormously in
volume terms already in third quarter, by 24 percent compared to the same quarter of the previous year. For the fourth
quarter the drop was even bigger, or 42 percent. In total the
drop in the COICOP group transport was slightly more than
1 Non-profit institutions serving households.
The Swedish economy – published March 2009
15 percent in last quarter of 2008. Instead, households chose other alternatives like rail transportation and other public
transport, which both rose by 7 percent. The contribution
from the group transport to household consumption was
–2.2 percentage points. Two thirds of the drop in household
consumption can thereby be explained by the enormous
decrease in transport.
Household consumption fourth quarter 2008
Share of Change in Contribution to
household
volume
a raise in
consumption, % compared to
household
Q 4 07, % consumption, %
Food and non-alcoholic beverages 15
Alcoholic beverages and tobacco
4
Clothing and footwear
6
Housing
32
Furnishings
6
Health
3
Transport
14
Communications
3
Recreation and culture
13
Education
0
Restaurants. hotels
6
Miscellaneous goods and services
12
Total consumption in Sweden
101
Of which purchases by visitors
from abroad
–6
Of which consumption by
residents in Sweden
94
Direct purchases abroad by
residents in Sweden
5
Total Swedish househ. consumption 100
services) have contributed strongly in recent years to the
rise in household consumption. In this commodity group
large quality adjustments have taken place. More technical
improvements are included without a corresponding rise
in prices. As a consequence the price indexes decrease.
Household consumption of these products still increases
but only when adjusting for quality improvements, that is,
in constant prices. The total amount, in current prices, that
households paid for these kinds of goods decreased in both
the third and the fourth quarter of 2008. Telecommunications showed the opposite trend, increasing by almost 10
percent.
–1.7
–8.0
0.0
0.7
–5.3
3.1
–15.6
9.9
–0.1
2.1
–1.8
–0.5
–2.6
–0.2
–0.3
0.0
0.2
–0.3
0.1
–2.2
0.3
0.0
0.0
–0.1
0.0
–2.6
6.7
–0.3
–3.6
–3.8
0
–11.4
–3.4
–0.5
–3.4
-5
Source: National accounts
Total household consumption, exclusive of NPISH, decreased by 3.3 percent in volume terms from the fourth
quarter 2007 to the same quarter 2008. Exclusive of NPISH,
total Swedish household consumption dropped by 3.4
percent.
Households reduced not only their consumption of durable
goods as cars and furniture. Expenditures for tobacco and
food decreased by as much as 21 percent. Both groups
had large price increases, 6.4 and 7.6 percent respectively,
since the fourth quarter last year, which may have affected
the consumers to tighten their consumption and choose
cheaper alternatives. Because the Swedish crown declined
in value compared to other currencies, imported goods
became more expensive and exported goods cheaper. The
TCW index, which measures the Swedish crown according
to a weighted basket with foreign currency, clearly shows
a weakening of the Swedish crown from the third to the
fourth quarter. The consumption of Swedish residents abroad decreased sharply and contributed to the drop in total
Swedish consumption by –0.5 percentage points. However,
is not necessarily due to lower consumption abroad. For
example, if more people buy “all inclusive” charter trips
where food and beverage are included in the price, it looks
like consumption abroad has decreased.
In addition, electronic goods like TV, DVD, photo equipment and computers (included in miscellaneous goods and
The Swedish economy – published March 2009
Decreasing household consumption in 2008
Households lowered their consumption in favour of savings
during the last part of 2008. As a result, total consumption
dropped for 2008. Household consumption expenditures,
exclusive of NPISH, decreased by 0.2 percent in 2008 compared to 2007.
Household consumption
Percentage change from previous year
15
Furnishings
10
5
Transport
-10
-15
Alcoholic
beverages
Motor vehicles
-20
-25
2001
2002
2003
Source:Nationalaccounts
2004
2005
2006
2007
2008
Data up to and including 2008
In the graph some of the COICOP groups are shown that
had the largest impact on household consumption development during fourth quarter of 2008. Looking at all of 2008,
household consumption expenditures rose for most of the
groups compared to 2007. Growth has slowed down and is
now lower than in previous years. One significant exception
is of course the purchase of cars, which has fallen tremendously from 2007 to 2008.
For the entire year of 2008 households have gradually lowered their consumption each quarter, seasonally adjusted and
in constant prices. Household consumption (excl. NPISH)
has decreased every single quarter during all of 2008, compared to the previous quarter. Consumption for both the first
and the second quarter decreased by 0.5 percent compared
to the previous quarter. Consumption for the third quarter
fell by another 0.8 percent, and fell in the last quarter by 1.2
percent. However, it should be noted that seasonal adjustments are more unstable when exceptional changes occur.
Contact person: Caroline Ahlstrand, 08-506 943 33
10
Government consumption
Government consumption still growing
The total government consumption expenditure increased
by 1.3 percent in 2008 and thus gave a positive contribution to the GDP development. The social benefits in kind
continued to grow strongly during the year and the quarter.
Investments in the public sector rose by 4.4 percent in
volume in 2008.
County council consumption continued to increase even in
2008, this time by 2.4 percent. Municipalities’ consumption
expenditure grew by 1.7 percent, mostly because of the
sharp increase in social benefits in kind. Central government consumption expenditure declined by 0.4 percent.
The main reason for the decline of government consumption was weak production, combined with increasing sales
(which is a deduction from consumption). The increase of
social benefits in kind (in part because of the new dental
reform) eased the decline somewhat.
Government consumption
Volume change from corresponding quarter
previous year. Percent
4
3
Central governm.
Municipalities
County councils
General governm.
2
1
0
-1
-2
-3
Q 1 08
Source:National
accounts
Q 2 08
Q 3 08
Q 4 08
Data up to and including fourth quarter 2008
Since public consumption is now calculated using volume
indicators for the production of individual services, production is of great importance in addition to sales and the
social benefits in kind. Therefore the accounts of public
consumption are complemented here with volume growth
rates for both the self-produced individual and collective
services.
2008
Consumption
Production
- individual services
- collective services
General
government
1.3
0.5
0.4
0.6
Municipa- County General gov.,
lities councils AP-funds incl.
1.7
0.3
0.1
0.9
Volume calculated according to the current method is higher than that calculated according to the old cost method,
except for general government for the full year 2008.
2008
General governm.
consumption
Volume measures
Cost method
Development for the sub-sectors
5
Consumption volume according to current
and older method
2.4
1.5
1.5
0.9
–0.4
0.0
–1.0
0.3
1.3
1.0
Municipa- County General gov.,
lities councils AP-funds incl.
1.7
1.1
2.4
1.8
–0.4
0.1
Consumption of municipalities increased by
1.7 percent
The municipal consumption volume growth was 1.7 percent
in 2008, but last quarter it grew by only 0.6 percent. A
strong contributing factor to the poor development at the
end of the year was the number of hours worked, which decreased in local municipalities. Hours worked are important
for the outcome because they have great importance for wages and social contributions in the collective consumption
but also for the quarterly distribution that is made of volume
measures for the individual production. Municipalities’
own production has evolved slightly positively in 2008. The
major activity in the individual services that had a negative
effect was compulsory school, where production fell by
3.8 percent, and thus helped to hold back the production
growth in 2008. Production of collective services, which
represents approximately one quarter of total municipal
production, had a positive development for the entire year
of 2008.
The social benefits in kind grew by 9.7 percent in the year
2008 and contributed most to the volume growth for municipalities. Purchases of main activities like e.g. educational
services and elderly care, increased throughout the year.
Municipalities with the largest increases reported that more
and more schools operated privately, and that more children are in preschool. Elderly care has been placed on the
private operators in a larger scale.
Council consumption rose by 2.4 percent
The volume measure of general hospital care, which constitutes the bulk of production for county councils, grew
by 1.1 percent, while specialised medical care, which is
the second largest activity for county councils, grew by 0.6
percent. Since over 90 percent of the costs of production in
the county councils is attributed to the production of individual services production, development of these coincides
in principle with the development of the total production
within the county councils.
11
The Swedish economy – published March 2009
Central government consumption expenditure decreased by 0.4 percent
a negative volume growth in all quarters, mostly because of
fewer registered students.
The decline in central government consumption was due to
an almost unchanged production while sales increased. The
production volume for all of 2008 ended was unchanged.
This is explained by the production of individual services
which decreased by 1.0 percent, while the production
of collective services, the largest part of the government
production which amounts to just over three quarters,
increased by 0.3 percent.
Durable goods for defence decreased by 17 percent in
2008. Central government sales, both external and internal,
rose by 4.6 percent in 2008. General government social benefits in kind increased by 8.9 percent in volume compared
with 2007. The explanation is mainly the sharp rise in the
second half of 2008 due to increased dental care expenditures as a result of the new dental care reform.
The production of individual services decreased because several of the largest areas, such as university education, had
Contact person: Vera Norrman, 08-506 943 04
Gross capital formation
Investment boom now broken
The long-term upward trend for gross fixed capital formation now seems to be broken. Compared to the previous
quarter, gross fixed capital formation for the third and fourth
quarter of decreased slightly. Due to the considerable GDP
growth in 2007, the gross fixed capital formation ratio increased further compared to the year before, and is now the
highest since 1990.The most important reason for reduced
investment development in 2008 was a sharp decrease in
housing construction. During the fourth quarter investments
in inventory had a significant downward effect on GDP
growth.
The economic bright spot that has endured for a long time is
now beginning to fade. The weakening of the economy has
now also reached investments. The long-term upward trend
for gross fixed capital formation now seems to be broken.
Those investments which increased incessantly quarter by
quarter since third the quarter 2003 have now decreased
during both third and fourth the quarter of 2008. The decreases, even though weak, have been by a few tenths of a
percent, seasonally adjusted and compared to the previous
quarters.
In addition, measurement over four quarters now shows a
downturn. During the fourth quarter of last year, gross fixed
capital formation was thus slightly more than one percent
under the level for the fourth quarter 2007. This implies that
the downturn in investments – in terms of GDP contribution
– corresponded to 0.2 percentage points of the actual GDP
downturn of 4.8 percent. Due to the stronger development
earlier in the year, gross fixed capital formation still rose
by 3.5 percent in 2008, implying that the rate of increase
was more than half that of the year before, and the lowest
increase since 2003. Despite the slowdown, gross capital
formation was the fastest growing item in the balance of
resources last year.
The Swedish economy – published March 2009
Gross fixed capital formation
Volume index 2000=100. Seasonally adjusted
quarterly figures
150
Gross fixed
capital formation
140
130
120
GDP
110
100
90
2000 2001 2002 2003 2004 2005 2006 2007 2008
Source:National
accounts
Data up to and including fourth quarter 2008
High investment ratio in a historic
perspective
Despite the strong development, the debate on the national
economy has often brought forth viewpoints that investments in Sweden are too weak and too low. However, from
a weak starting point a few years into the current decade,
investments have gained strength as a feature in the economy. Seen from a longer time perspective, the current level
of investments in the economy is seen as high. Investments
last year continued to develop considerably better than
the entire GDP, as illustrated in the investment ratio (the
percentage gross fixed capital formation of GDP) which rose
from 19 percent in 2007 to 19.6 percent in 2008. This is the
highest level since 1990. Since 1980 the investment ratio
has been higher than the current one only during the years
1987–1990, i.e. during the years of the overheated economic boom.
12
The percentage of gross fixed capital formation of GDP is
also better in an international perspective than before. In
2008 the investment ratio for the EU 15 was 20.9, implying
that the distance to the EU15 has shrunk by 1.3 percentage
points in recent years. In 2003 when the upturn for investments began in Sweden, the distance to the EU15 was 3.4
percentage points. Germany, the largest member country
in the EU, had an investment ratio that was 19.2 percent
lower than in Sweden, and during the most recent five year
period its growth was considerably lower at slightly more
than one percentage point. Sweden’s results are even more
favourable when compared to the world’s largest economy
the US. In 2008 the US investment ratio was 17.8 percent, a
decrease of one-half of a percentage point since 2003.
Gross fixed capital formation
The transport sector, mining industry and the energy sector
had the most expansive development, with continued substantial increases of investments during the fourth quarter
by about 39, 20 and 9 percent, respectively. Despite the
increasingly weak industrial economy, investments in this
area still have been doing relatively well, with a marginal
decrease in the fourth quarter of barely one percent and
an equally large rise for all of 2008. Those industries that
have cut back on development are business services (down
4.5 %) and the financial sector where the crisis seems to
have been hit hard and fast, diminishing the will to invest.
Credit institutes and insurance companies reduced their
investments sharply, by over 17 percent in the fourth quarter
after a considerable decrease in the third quarter as well.
Gross fixed capital formation
SEK billions, current prices and percentage change from corresponding quarter previous year, constant prices
Percentage of GDP
25
EU15
20
15
Business sector
Manufacturing industry
Energy industry
Services producers1
Business services
Public sector
Central government
Municipalities
Total
Machinery
Transport equipment
Housing
Other construction
Software
Sweden
10
5
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Data up to and including 2008
Source:Eurostat
It has also been maintained that the upswing that occurred
in the investment ratio in recent years is mainly due to the
sharply rising housing investments during this period, but
this does not hold true either when comparing backwards in
time. In 2008 the investment ratio was 16.5 percent without
consideration to housing investments. This figure was an improvement of about one-half of a percentage point compared to the year before. By using this method of calculating,
the investment ratio since 1980 was only higher during the
years 1988–1990.
Significant cutbacks within the financial
sector
For the first time in many years, public sector investments
during the fourth quarter increased by a few percent,
clearly better than investments of the business sector which
now showed an equal decrease. Within the public sector,
municipalities showed the largest increase in investments,
mainly due to a sharp increase in construction investments
in Stockholm. The main reason for the downturn within the
business sector, which otherwise was the first downturn since the beginning of 2004, was due to the sharp declines of
construction and property management. Within the business
sector, development is otherwise more uneven than usual.
Certain industries reported very large increases of their
investments while others showed considerable downturns.
2008
Full year
Q 1
Q 2
Q 3
Q4
523
88
49
193
46
97
47
50
620
201
63
98
164
94
5,6
–0.4
–3.5
13.1
21.8
7.9
11.8
3.9
5.9
4.8
22.2
0.3
5.4
2.4
5,7
1.5
7.8
8.7
20.0
13.7
17.2
10.4
6.8
7.9
8.3
–2.1
13.5
3.2
4,0
2.3
2.8
10.1
16.6
–4.3
13.0
3.9
2.8
8.3
22.3
–6.1
1.1
–3.4
–1,9
–0.8
8.6
4.5
–4.5
1.8
2.7
1.0
–1.2
–0.1
15.4
–14.7
5.8
–10.7
Source: National accounts
Drop in housing construction continues to
accelerate
One of the most outstanding features of the investment
picture during last year was the sharp downturn of housing construction. During the fourth quarter the downturn
continued to accelerate with a 14.7 percent drop. Similar to
previously during the year, construction of homes dropped
sharply and accounted for the entire downturn of housing
investments. New construction for one-or two-dwelling
buildings fell by 26 percent, and that for multi-dwelling
buildings by 23 percent. Renovation investments continued
to increase, but still at a decreasing rate. The slowdown and
weakening of housing construction has been going on incessantly quarter after quarter since the beginning of 2006,
when the rate of increase was highest. Housing construction
decreased by 5.4 percent for all of 2008, the first clearly
marked downturn since 1997.
However, investments in other buildings, plants and roads
continued to show a sharp increase of 5.7 percent, resulting
in a further increase of one percentage point for the entire
year. The development for granted building permits does not
indicate any quick turning point upwards for construction
1 Excluding real estate services.
13
The Swedish economy – published March 2009
since the number of permits continued to decrease during
the fourth quarter. Nevertheless, this decrease was at a slower rate than the sharp downturn of the third quarter.
tion levels that occurred in industrial enterprises between
the fourth quarter of 2007 and the fourth quarter of 2008,
which totalled 12.5 percent.
Leasing investments gain ground
Involuntary build-up of inventory of finished
goods
In sharp contrast to the weak development in the construction industry, investments for transport means grew sharply
by 15 percent in the fourth quarter, after an increase of 22
percent the quarter before. One important reason was that
car leasing continued to increase sharply, but at the expense
of a continued sharp decrease of car purchases financed
individually.
This pattern of increased financing through leasing at the
expense of individually financed investments re-occurs
in the way that machinery investments are now financed.
During the fourth quarter investments in machinery and
equipment remained unchanged at a high level, implying
that the upswing for the entire year totalled a strong 4.9
percent. Investments in other items, software in particular,
decreased during the fourth quarter, due to a significant
decrease in brokerage fees by 11 percent.
According to the most recent questionnaire on investments
sent to enterprises in the beginning of March, further decreases in business investments are seen for 2009. Basically,
all important industries report plans for reduced investments, in many cases significant decreases in 2009 compared to 2008. This applies to both the manufacturing and
construction industry and the private service sector.
Investments in inventory brought down GDP
growth
Inventories had an unusually significant influence on the
sharp downturn of the Swedish economy during the last
quarter. From the fourth quarter of 2007 until the fourth
quarter of 2008, GDP fell by 4.8 percent. The decrease
of industrial inventories contributed a full 1.8 percentage
points to this downturn. Considerable decreases in inventories from the manufacturing industry contributed the most,
but decreases in trade inventories were also behind the
downturn.
Sharp decrease in industrial inventories of
goods under production
A dramatic decline occurred for industrial inventories of
goods under production, which accounted for the entire
decrease in inventories from the fourth quarter of 2007
until the fourth quarter of 2008. Looking at the change of
these inventories alone, the corresponding decline of GDP
development was 1.5 percentage points. Development of
these types of inventories is directly connected to production development in enterprises and industry. The decrease
in these inventories is not due to direct actions or decisions
for changes of inventories in the enterprise, but occurs automatically as a result in the changes of the production level
of the enterprise. This decrease was so extensive during the
fourth quarter because of the sharp cut-backs in producThe Swedish economy – published March 2009
As the economic situation gradually worsened, a buildup of inventories of finished goods occurred between the
fourth quarter of 2007 and the fourth quarter of 2008. According to inventory statistics, inventories had increased by
nearly SEK 3 billion or about 4 percent in constant prices.
The increase in current prices for these four quarters was
considerably larger, or SEK 7.3 billion. Considering the sharply weakened demand, an increase of inventory of finished
goods was both involuntary and unwelcome. However,
the increase in inventory of finished goods in industry only
had a small effect on GDP development between the fourth
quarter of 2007 and the fourth quarter of 2008.
In the short-term perspective, the build-up of inventory of
finished goods has been much more extensive. The Business
Tendency Survey shows a drastic worsening of the situation of inventories for industry, mainly concerning finished
goods for direct delivery to customers, during the second
half of last year. The build-up of inventory of finished goods
began to increase more rapidly during the third quarter and
then rose even more significantly during the fourth quarter,
seasonally adjusted and compared to the quarter before.
Current assessments from industrial enterprises about the
size of inventories of finished goods have not been so negative since the Swedish economic crisis of 1991.
The third type of inventories in industry, intermediate goods,
which does not actually affect estimations of production,
also increased despite the sharp decline of the production
level. According to inventory statistics, the rise from the
fourth quarter of 2007 to the fourth quarter of 2008 was SEK
2.4 billion in current prices, and SEK 0.5 billion in constant
prices. However, not even in the case of inventories of
intermediate goods have desired levels of inventories been
reached. Industrial enterprises have expressed increased
dissatisfaction in the Business Tendency Survey about inventories of intermediate goods being too large in the fourth
quarter.
Reduced inventories in trade
A significant decrease of inventories occurred in trade from
the fourth quarter of 2007 to the fourth quarter of 2008. The
decrease of inventories here had a downward influence on
GDP by about 0.7 percent. Compared to the year before,
wholesale trade had the largest decrease of inventories, but
trade in infrequently bought goods has also seen a reduction of inventories during the period. Within other areas
of business – the energy sector and forestry – inventories
increased somewhat and thus contributed to GDP development by 0.2 percentage points.
Contact person: Bo Sandén, 08-506 946 94
14
The business sector
A historical fall in the business production
During the fourth quarter of 2008 production in the business sector fell sharply. This resulted in a drop in production
of goods from 2007 to 2008, which was only the second
time since 1994 production fell on an annual basis. This
decrease was also larger than that in 2001.
The value added of the business sector dropped from the
third to the fourth quarter by an extremely large percentage.
After a negative growth rate during the first two quarters
with around half a percentage point for each quarter
and more than a full percentage point during the third, it
reached the extreme value of 2.4 percentage points during
the last. As can be seen in the graph the drop in production
was larger during 2008 than ever before during the period
1993–2008. The growth rate for production has been negative only in four previous quarters, never with higher growth
rates than 0.3 percent. Today’s financial crisis is unique in
modern time and it is not particularly surprising that the
effects on the Swedish economy have been that dramatic,
considering that Sweden’s economy is small and highly
dependent on exports, particularly for investment goods.
difficult, and in many cases quite impossible. This has added to the impact of the fall in the real economy, which has
been caused by this crisis that has led to excessive capacity
in most industries. This is the background to the very severe
drop in demand for investment goods which also normally
decreases towards the end of the business cycle. The chemical and the wood and paper industry have performed better
and been affected to a much smaller extent by the crisis.
Value added for selected manufacturing
industries
Percentage change compared to previous quarter.
Seasonally adjusted
12
10
Engineering
6
4
2
0
-2
-4
Value added in the business sector
Wood and paper
-6
Percentage change compared to previous quarter.
Sesonally adjusted
-8
2004
2005
Source:National
accounts
3
2
1
0
-1
-2
-3
Chemicals
8
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Source:National
accounts
Data up to and including fourth quarter 2008
It is of course necessary to take into account that seasonal
adjustments are especially problematic when development
has been so dramatic.
The manufacturing industry has been
affected most sharply
The export of goods has dropped significantly, as has
already been shown. The engineering industry is normally
a high growth industry, but its specialisation in investment
goods has proved to be a severe disadvantage just now.
The financial crisis has made the financing of investment
2006
2007
2008
Data up to and including fourth quarter 2008
After comparatively limited negative growth rates during
the first three quarters of 2008, the fourth quarter resulted
in a dramatic drop of over 6 percentage points for the value
added of the engineering industries. Even if the forestry
industry had experienced a negative growth for five successive quarters it has developed much less dramatically.
Forestry products are to a much larger extent dependant on
the economy at large, including private consumption, which
has eased the negative growth rates. The large drop of the
Swedish currency in the second half of the year should also
have strengthened the industry’s position on the markets,
which are typically auction markets. The chemical industry
seems to have best survived the crisis.
2008 in total is also unique
Despite that this year started off quite well and the weakening of the economy did not become obvious until the
third quarter, to hit with full force during the fourth, development for the full year became extremely weak. Service
production that has reached a growth rate of two percentage
points during most of the last 15 years, was almost unchanged. Goods production that diminished only during the year
of the ICT crisis in 2001 this time dropped much more or by
1.3 percent compared to 0.4 percent for 2001.
15
The Swedish economy – published March 2009
Value added in the business sector
Hours worked
Percentage change compared to previous year.
Constant prices
10
Percentage change compared to previous year
6
Goods producers
Service producers
8
Goods producers
Service producers
4
6
2
4
0
2
-2
0
-4
-2
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Large differences in employment growth
Development in the number of hours worked during the last
two quarters of 2008 has been very different for the goods
producers compared with the service providers. Growth
has stopped in the service producing parts of the business
sector during these two quarters, but compared to the goods
producers it is still a relatively uneventful development.
Productivity growth has remained weak
The growth rates for the labour productivity in the service
producing part of the Swedish business sector have remained positive and very stable during 20 quarters in a row
after the ICT crisis 2001 up to the second half of 2006.
However, the growth rate has on average been substantially
lower than for the manufacturing industry.
Labour productivity
Hours worked
Percentage change compared to previous quarter.
Seasonally adjusted
Percentage change compared to previous quarter.
Seasonally adjusted
5
2.5
1.5
3
2
0.5
1
0.0
0
-0.5
-1
-1.0
Goods producers
-1.5
-2.0
Source:National
accounts
2005
2006
2007
-3
2008
The large number of people that have been given notices
of lay-offs during the last quarter indicates that the drop in
hours worked will increase substantially. This development
translated into yearly terms can be seen in the graph below.
In yearly terms development looks quite different. Service
providers as well as goods producers increased their input
of hours worked sharply in 2008.
2001
2002
Source:National
accounts
Data up to and including fourth quarter 2008
The fall in the demand for products from the manufacturing
industries has caused a sharp drop in worked hours between the third and fourth quarter of 2008. However, the
decrease in the number of worked hours has not been on
the same magnitude as the drop in production.
Manufacturing
industry
-2
-4
2004
Service
production
4
Service
producers
1.0
-2.5
Data up to and including 2008
Sourcce:Nationalaccounts
Data up to and including 2008
Source:Nationalaccounts
2.0
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
2003
2004
2005
2006
2007
This development has ceased to exist since the growth rate
has been positive for just one of the last six quarters. As
seen in the graph above the weak production growth has
so far not led to a large decrease in the number of hours
worked. This is not a sustainable development in the long
run. Not even in the manufacturing industry has the large
decrease in hours worked matched the very large drop in
production, in spite of the large reductions during the fourth
quarter. This has resulted in a decrease in labour productivity during 2008 for this part of the business sector as well.
The productivity level in 2008 was almost three percent
lower compared to 2007 for the goods producers as well as
for the service providers.
Contact person: Hans-Olof Hagén, 08-506 944 66
The Swedish economy – published March 2009
2008
Data up to and including fourth quarter 2008
16
Labour market
Disturbing state of the labour market
Relative unemployment, ages 16–64 by sex
The economic crisis, which became stronger during the
autumn, had not yet led to any dramatic change in employment or unemployment in the fourth quarter. However,
a worsening state of the labour market is clearly visible.
Labour Force Survey (LFS) data for the first month of 2009
confirm that a decline in employment and an increase in
unemployment are under way.
Seasonally adjusted data1 indicate a minor decline in employment2 from the third quarter and an increase in relative
unemployment one quarter earlier. The difference in time
is because of the continuously increasing labour force.
This probably means that the last three years’ continuous
increase in employment has ceased for the time being.
Seasonally adjusted quarterly values. Percent of
the labour force
9
8
7
6
3
2
1
0
Seasonally adjusted quarterly values. Thousands
2 200
2 100
2004
2005
2006
2007
2008
Data up to and including fourth quarter 2008
Seasonally adjusted quarterly values. Thousands
90
2001
2002
Source:LFS
2003
2004
2005
2006
2007
2008
Data up to and including fourth quarter 2008
Unemployment has increased more for women than for
men, which reflects the sex distribution among industries.
Unemployed, ages 16–64 by sex
80
70
60
50
40
30
Seasonally adjusted quarterly values. Thousands
20
250
10
Unemployed men
0
200
2001
2002
2003
2004
2005
2006
2007
2008
Source:Thesurvey Data up to and including fourth quarter 2008
onjobopeningsandunmetlabourdemand
150
Unemployed women
100
50
0
2003
Job openings
Employed women
1 900
0
2002
The number of job openings, according to seasonally
adjusted data from the survey on job openings and unmet
labour demand, has been slowly declining since the beginning of 2008 and fell rapidly during the last quarter. The
decline in the future need for recruitment occurred predominantly in the largest firms, or those with more than 200
employees.
Employed men
2 000
2001
Source:LFS
2 400
Men
4
Employed, ages 16–64 by sex
2 300
Women
5
2001
Source:LFS
2002
2003
2004
2005
2006
2007
Neither employment nor unemployment have yet reached
the levels of the previous downswing around 2004. The
number of job openings, however, is close to the lowest
level of 2004. The number of hours worked, which usually
1 All seasonal adjustment has been done using Demetra (Tramo/Seats) with default adjustments. These data are not available in Statistics
Sweden’s statistical database, since official seasonally adjusted data
have not yet been produced.
2008
Data up to and including fourth quarter 2008
2 If, like in the national accounts, only those employed in Sweden are
counted, the decline is larger.
17
The Swedish economy – published March 2009
declines earlier than the number of employees when the
business cycle turns downwards, follows the development
of employment this time.
Hours worked
Seasonally adjusted quarterly values. Millions of
hours per week
140
Unemployment also hits permanent
employees
138
The flow statistics from the LFS show that the number of
people with permanent employment that have become
unemployed has increased substantially during the last two
quarters of 2008.
136
134
132
130
128
126
0
curs with a two quarter lag, which goes well with the time
needed for transforming a general notice into dismissals of
specific people. Also, dismissals of fewer than five employees do not have to be preceded by notices. Therefore, the
connection between the number of notices and the number
of unemployed is weak.
2001
2002
Source:LFS
2003
2004
2005
2006
2007
2008
Data up to and including fourth quarter 2008
The number of people outside the labour force increases
along a trend, primarily because of the increasing population and the rising average age. Following a decline from
the beginning of 2007, the number has increased from the
middle of 2008 (see the table below). Exits from the labour
market into studies or early retirement are to some extent
complementary to an increase in unemployment.
The number of notices during quarter one and two was
just below 15 000. If a two quarter lag between notice and
dismissal is taken into account, the outflow of people from
permanent employment into unemployment or out of the
labour force during the last quarter reflects this increase in
notices. If the large number of notices in the fourth quarter
is carried out, there is a risk of a dramatic increase in the
number of dismissals in the near future.
Flows between different groups in the labour
market
Percent change from corresponding quarter
previous year
60
50
The number of notices of lay-offs increased, according to
data from The Swedish Public Employment Service, rapidly
at the end of 2008, from about 14 000 in the second and
third quarters to about 57 000 in the fourth quarter.
40
Permanent employees
Permanent employees
Temporary employees
Temporary employees
Unemployed
Not in LF
Unemployed
Not in LF
30
20
10
Notice of lay-offs
0
Thousands
-10
60
-20
50
-30
Q3 Q4
2006
Source:LFS
40
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007
2008
Data up to and including fourth quarter 2008
30
The manufacturing industry and the public
sector declined most
20
10
0
2001
2002
2003
2004
2005
2006
2007
2008
Source:TheSwedish Data up to and including fourth quarter 2008
PublicEmploymentService
The notices primarily concern permanent employees. Temporary employees are always hit stronger in the beginning
of a downswing, since their positions can be terminated as
soon as the agreed employment period ends. Simultaneously, there is a tendency for employers to give more notices to
permanently employed people than they are actually going
to carry out. The strongest statistical correlation between the
number of notices and the increase in unemployment ocThe Swedish economy – published March 2009
The worsened state of the labour market is all but surprising. The manufacturing industry has experienced a marked
decline in new orders since the beginning of 2008 and the
degree of capital utilisation has gone down during the last
three quarters to the lowest level since 1992.
According to seasonally adjusted data from the firm-based
short term employment survey, which measures the number
of employees (excluding the self employed), employment
in the goods producing industry has declined by more than
one percent from the previous quarter. This is still a smaller
decline than the one in the public sector, which incidentally
has been going on largely uninterruptedly since the beginning of 2007.
18
There were almost 8 400 employees whose employers had
gone bankrupt during the fourth quarter. This is the largest number in the 21st century. It is worth noting that the
number of bankruptcies is usually the largest at the end of a
recession, not in the beginning.
Not surprisingly, considering the recent alarming reports
from the car industry, the motor vehicle industry was one of
the industries where employment decreased the most. More
than half of the notices in the manufacturing industry during
the fourth quarter concerned the motor vehicle industry,
while it held only 27 percent of the employment in the
manufacturing industry. The largest relative decline (5.7 %)
occurred in the wood and paper products industry. The
construction industry and the service producing industries
continued to increase their employment.
The number of employees in the fourth quarter
compared to the third quarter 2008 by industry
Percent change, seasonally adjusted values
The development of employment in different parts of the
country is highly connected to the industrial structure.
During the fourth quarter, the number of employees has
decreased in all regions except for Stockholm and north
central Sweden. The negative development is mainly due to
fewer employees in the public sector. A part of this decline
surely consists of a transfer of personnel to service companies.
The number of employees in the fourth quarter
compared to the third quarter 2008 by region
(NUTS 2)
0.2
Percent change, seasonally adjusted values
0.0
-0.2
-0.4
-0.6
-0.8
1.0
-1.0
-1.2
0.5
-1.4
0.0
-1.6
-0.5
Stockholm
West Småland South
Sweden and the Sweden
islands
Source:ShortTermEmployment
-1.0
-1.5
Upper Middle North
East
Norrland Norrland Middle Middle
Sweden Sweden
Contact person: Claes-Håkan Gustafson, 019-17 61 19
Total
Business
sector
Public Manu- Construc- Services Business Transport
sector facturing tion
services
Source:ShortTermEmployment
Development of a few indicators of the state of the labour market
Year
Employ- Employment
Unemploy-
Quarter
ment
share of
ment
ages 16–64 population
ages 16–64
ages 16–64
Thousands
Percent
Thousands
2004
2005
2006
2007
2008
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
4 175
4 262
4 312
4 227
4 178
4 269
4 335
4 268
4 234
4 331
4 434
4 365
4 338
4 446
4 543
4 452
4 421
4 509
4 567
4 440
73.0
74.4
75.1
73.5
72.6
74.1
75.1
73.8
73.0
74.4
76.0
74.7
74.0
75.7
77.2
75.5
74.8
76.2
77.1
74.7
Relative
unemploy- ment ages 16–64
Percent
Outside
labour
force
ages 16–64
Thousands
Hours worked
ages 16–64
8.0
8.5
7.5
7.1
8.0
8.6
7.2
7.1
7.8
8.0
6.4
6.1
6.8
6.9
5.5
5.5
6.2
6.6
5.6
6.2
1 182
1 071
1 080
1 197
1 213
1 096
1 101
1 190
1 209
1 112
1 098
1 200
1 205
1 096
1 073
1 182
1 196
1 091
1 086
1 209
128 620
131 450
111 910
134 230
129 660
137 110
115 460
138 430
137 590
132 820
119 050
141 180
141 610
137 730
122 550
144 550
138 410
146 700
121 770
144 400
365
398
348
325
364
399
337
327
358
379
302
282
315
328
265
259
291
318
272
293
19
Job Notices of
openings dismissal
Thousands Thousands Thousands
36
41
37
36
38
46
38
45
49
48
44
45
53
61
52
52
57
55
48
36
17
17
13
14
18
13
10
11
10
8
8
11
9
6
7
8
9
15
14
57
The Swedish economy – published March 2009
Financial crisis as seen in statistics
Statistics suggest a relatively
well-functioning credit market
The financial crisis developed very quickly into a real economic crisis that almost immediately had an impact on demand, investment and growth. The drop in Swedish GDP is
an expression of this. Paradoxically, however, the crisis is not
reflected as clearly in the financial statistics. At an aggregate
level, the effects on banks and corporate balance sheets are
so far relatively small.
However, behind the aggregates of banks’ lending and
borrowing there are several underlying components, which
clearly show that the crisis has had an effect on the balance
sheets. Firstly, measures taken by the Riksbank and the Swedish government have highly contributed to the maintenance of credits. Secondly, banks and non-financial enterprises
have had obvious difficulties to get credits from abroad.
Thirdly, the difficulties for banks and mortgage institutions
to refinance their securities borrowing abroad resulted in
extensive amortizations of approximately 400 SEK billion
during September-November 2008. These amortizations did
not have an equivalent affect on the banks’ balance sheets
since the Swedish krona at the same time depreciated strongly relative to other currencies.
The statistics provide no clear answer to whether the nonfinancial companies have been faced with a credit collapse
or not. The business sector still seems to have been able
to maintain funding, but it has probably happened at high
costs and some categories have most likely been superseded
by larger and more creditworthy companies.
Background
In the last issue of the Swedish Economy the recent decade’s
development of the Swedish banking sector’s balance sheet
was described. From 1980 until mid-2008 total assets rose
from 120 to 280 percent of GDP. The increase has been
sharp since 2003 when the banks’ balance sheets in absolute terms almost doubled. The difference in the financial
sector’s growth in relation to the development of the real
economy (GDP) has thus increased considerably in recent
years. Another conclusion was that the main explanation
for the increase was not increased lending to Swedish
households and companies but a strong growth of lending
abroad. Finally, it was found that the volume expansion
of the banking sector is likely to have passed its peak and
that the banking sector is likely to shrink in the tracks of the
financial crisis.
1 The banking sector means what is known in the statistical classification as MFIs (excluding Riksbanken) that is to say, banks and mortgage
institutions. See, e.g. page 17 of “The Swedish economy – statistical
perspective” No 3 2008 for a more precise definition.
The Swedish economy – published March 2009
In this article, a considerably shorter perspective of primarily the banking sector1 and part of other sectors’ balance
sheets will be studied. Other half-year statistics on developments in the financial sector are now available through the
banking statistics of Statistics Sweden and the Riksbank. In
addition, data on financial flows from the balance of payments statistics are available, which also help to highlight
the financial crisis during the second half of 2008.
Initially, a description of the financial crisis’ origin is made
and how it is reflected in various financial statistics from
banks and other sectors. The actions of the Riksbank and
other governmental actions are given particular attention in
the article. A sector of the economy, which unfortunately
is not as well illuminated statistically, is the non-financial
companies. Media reported that these companies are strongly affected by the credit tightening from both banks and
the international capital markets. How is this reflected in
the statistics?
The crisis’ roots
The so called subprime crisis in the United States spread
quickly to the rest of the world through the complex
network of financial instruments and investors who, more
or less aware, had come to be exposed to these American
mortgage loans. As the credit losses on such loans began
to be large and the extent of the lending became obvious,
a deep worry in the financial sector was spread. A global
mistrust between different financial players arose.
Late Summer 2008 the crisis was accentuated further when
first the U.S. government took over mortgage institutions
Freddie Mac and Fannie Mae, and in September Lehman
Brothers went into bankruptcy. Now the effects spread and
were seen throughout the global financial system. In the
U.S. and Europe the banking crisis became apparent. The
distrust between banks and other financial institutions resulted in an almost collapsed interbank market. Governments
and central banks set up massive measures of support that
were both focused on nationalisation of banks and various
types of loan facilities.
With unexpected swiftness, the financial crisis had immediate impact in the real economy. The American car industry
faced urgent problems that spread all over the car industry
globally. Large staff reductions followed and like the ripples
of a waterdrop, the crisis was spread to the whole of the
traditional manufacturing industry. Few countries in the
industrialised world have escaped the ravages of the crisis.
In Sweden, the picture was about the same as in the rest of
the world. Perhaps Sweden was better equipped than most
countries to meet the financial crisis and slowdown in the
20
global economy. Not least, this was reflected in the Swedish housing market that worked very well until September
2008. But in the autumn the financial crisis also affected the
Swedish banks and other credit institutions with full force.
The increasing difficulties for the banks to get liquidity
threatened to rapidly drain the firms and households’ access
to credit.
Banks' liabilities
SEK billion
12 000
10 000
6 000
4 000
2 000
0
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
-07 -08
Data up to and including December 2008
Source:Financial
marketstatistics
What happened in the banks’ balance sheets
in autumn 2008?
Banks' assets
SEK billion
12 000
10 000
Lending
Shares and equity
Debt securities
Other assets
8 000
6 000
4 000
2 000
0
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
-07 -08
Data up to and including December 2008
Source:Financial
marketstatistics
Within the banks liabilities no dramatic changes is shown
as a result of the economic crisis. Deposits and borrowing
show a steady increase over the last six months. During the
last months of the year, however, they tend to level off. Most
probably the banks’ borrowing should have continued to increase unless the interbank market ceased to work normally
at the same time as other channels of credits also were
closed. This is not possible to illustrate only on the basis of
these statistics.
Debt securities
Equity
8 000
The spread to the real sector was almost brutal and there
was a grinding halt in major parts of the manufacturing
industry due to rapidly falling demand. The fourth quarter
GDP figure with a growth reduction of almost 5 percent
shows that the financial crisis also very quickly turned into a
real economic crisis.
On an aggregated level it is difficult to infer any obvious
effects of the financial crisis in the balance sheets of the
Swedish banks and mortgage institutions. The Money and
Banking statistics show that the value of banking sector
lending during the autumn and winter of 2008 continued
to increase, albeit at a fairly slow pace. Neither the value
of the banking sector’s shares or debt securities changed
dramatically during the period. It can be concluded that
the growth in banks’ balance sheets appear to have slowed
down.
Deposits
Other liabilities
The value of securities borrowing declined somewhat in line
with the growing difficulties to obtain loans on international
capital markets. Despite the depressed growth in balance
sheets it still seems as if the banking sector has worked
more or less normally in the autumn and winter. A further
breakdown of the statistics is needed to better reflect the
economic crisis’ impact on financial markets.
Banks’ borrowing
When disaggregating records of the banks’ balance sheets
and combining the Money and Banking statistics with other
statistics, a number of events that may be worth highlighting
emerge. Several phenomena are widely known; others are
described in a less coherent manner, and especially not
illustrated in figures.
One of the first effects of the financial crisis was that the
interbank market for lending and borrowing almost ceased
to function. This led government and Riksbank to take a
host of measures simply to ensure the functioning of the
financial markets. The authorities’ actions will be described later in this article. Another immediate consequence
of the emerging crisis was a more or less total stop for the
banks to finance themselves through debt securities in the
international capital markets. Banking sector issues of debt
securities have become an increasingly important source to
finance loans to households, institutions and companies.
The household sector demand for housing financing has
especially driven the last few years’ increase in the banking
sector borrowing via debt securities.
In August 2008 the total currency borrowing by debt securities amounted to nearly SEK 1 400 billion (graph below).
During the period September to November the stock of securities was reduced to SEK 1 170 billion. The graph shows
that the decrease was primarily due to the short-term certificates maturing and that the banks simply could not get new
loans. The reduction of the outstanding debt securities portfolio of over SEK 200 billion would have been much larger
if it was not for the weakening of the Swedish krona during
the autumn and winter. When the krona is weakening as it
21
The Swedish economy – published March 2009
continuously has done since the crisis began in September,
the debt in foreign currencies, expressed in Swedish kronor,
automatically increases.
The balance of payments statistics reported in the period
September to November, outflows of capital from the banking sector at more than SEK 400 billion. In other words, if
the krona exchange rate had remained unchanged during
that period, the banks’ liabilities should have decreased by
more than 400 billion kronor. Instead, the decline was 210
billion. It must be noted that this is not about banks making
large exchange rate losses, because virtually all debt securities borrowing in foreign currency are swapped to Swedish
kronor, and thus are protected from exchange rate changes.
In December 2008 the debt increased slightly again. Again,
it depends on the continued weakening of the krona and
that some banks were able to issue both bonds and certificates during the month. One bank, with the support of
the government guarantee program, was able to issue both
bond and certificates during the month (see also below in
the review of the authorities’ actions during the crisis). It seems therefore that the market for securities borrowing eased
slightly in late 2008.
Banks' securities issues in foreign currency
SEK billion
1 600
1 400
Certificates
Bonds
1 200
1 000
800
600
400
200
0
2005
Source:Financial
marketstatistics
2006
2007
2008
Data up to and including December 2008
While the door was closed during the early autumn for
banks to borrow abroad, non-financial enterprises’ demand
for bank credits increased. This increase was even more
significant because most of the non-financial companies
faced the same closed door for international securities borrowing and consequently the pressure on credit from the
banks increased even more. An acute liquidity shortage for
households and businesses threatened. This led the government and the Riksbank to take a variety of measures to
guarantee banks’ access to capital and hence the enterprise
and household needs for loans.
agreements1. At the same time, the Swedish National Debt
Office (NDO) decided, after discussion with the Riksbank,
to issue short-term treasury bills in order to offset the lack
of government securities2 that arose during the first month’s
turbulence. The liquidity NDO received was lent to the market through reverse repurchase agreements with guaranteed
housing securities as collateral. In a first step, treasury bills
of SEK 50 billion were issued but the NDO announced that
the issued volume could be extended to SEK150 billion. At
the end of the month, the Riksbank announced, together
with the Norwegian and Danish central banks among
others, the establishment of a currency arrangement (swap
facility)3 with the Federal Reserve. The arrangement was
aimed to provide loans in USD to banks. In total, this swap
arrangement corresponded to USD 30 billion.
In October the Riksbank offered additional credit facilities
to banks, this time in SEK with a maturity of three or six
months. This was a measure to give banks an opportunity for funding in the longer maturities and at lower cost
than was possible in the market. In a number of so-called
auctions over SEK150 billion were lent. At the same time
additional loans of USD 10 billion were offered. At the end
of the month, the government introduced the state guarantee scheme for banks and housing institutions medium-term
borrowing. For instance, it has led to Swedbank in the
winter being able to issue certificates and bonds for nearly
SEK 200 billion4.
The large addition of SEK from the Riksbank led to excess
liquidity for the banks that needed to be reinvested in the
Riksbank. The alternatives for these reinvestments were
either in the form of deposits (fine-tuning operations) or
investments in Riksbank certificates. These certificates were
at fixed interest rates (repo rate) and have 7 days duration.
During November, December and also since the end of
the year, the Riksbank continued to offer loans in SEK and
foreign currency to the banking system.
As a result, the balance sheet of the Riksbank since the end
of August 2008 has increased from approximately SEK 200
billion to SEK 700 billion by the end of the year. The effects
of all actions can be seen in the table below. In assets it can
be clearly seen how the Riksbank’s loans in SEK to banks
increases from virtually zero to SEK 266 billion. The excess
liquidity that thus occurred in the banking system was in
1 The Riksbank borrows foreign currency for a fixed duration, leaving
collateral in the form of securities. This is a way to provide additional
liquidity through the use of existing securities.
2 A classic “flight to quality” arose and investors rejected securities of
mortgage institutions in favour of safe government securities. The high
demand for treasury bills resulted in a shortage situation that the National Debt Office, in consultation with the Riksbank, tried to remedy.
Quick action by the Riksbank and National
Debt Office
3 The Swap Facility with Federal Reserve means that the Riksbank
briefly borrow USD in exchange for SEK.
In mid-September the Riksbank began to increase the liquidity of its foreign exchange reserves by borrowing foreign
currencies with securities as collateral, so-called repurchase
The Swedish economy – published March 2009
4 The Swedish Financial Supervisory Authority “Effekterna av de
statliga stabilitetsåtgätderna”. Second Report in 2009. (Not translated to
English).
22
part invested in Riksbank certificates but mostly over-night
in fine-tuning operations, items that can be seen in the
liability side.
The Riksbank’s assets and liabilities
Swedbank and Danske Bank Sweden Branch are the institutions that have borrowed the most from the Riksbank.
Handelsbanken is the only major bank that did not need to
borrow in USD.
Riksbank lending in USD to major banks
SEK billion
Assets
Aug 31 -08
Dec 31 -08
Change
SEK billion
Gold
Foreign exchange reserves
Lending in USD
Lending in SEK
Other assets
Total assets
25
174
0
1
4
204
30
200
196
266
7
700
5
26
196
265
3
496
250
Liabilities
Banknotes and coins
Fine-tuning operations
Debt certificates issued
Liabilities in SEK (Fed)
Other liabilities
Capital and reserves
Total liabilities
107
0
0
0
38
59
204
112
207
49
189
84
59
700
5
207
49
189
56
0
496
200
SEB
SEB
SEB
150
Nordea
Nordea
Nordea
100
Danske bank
Danske bank
Danske bank
Swedbank
Swedbank
Swedbank
Oct -08
Nov -08
Dec -08
50
0
Source: Sveriges Riksbank
The USD liquidity that the Riksbank added to the banks is
shown under lending in USD, while the Riksbank’s funding,
through the swap facility with Fed, can be seen under liabilities in USD. It is quite probable that the USD loan from
the Riksbank has significantly replaced the banks’ loss of
securities borrowing.
The palette of action by the Riksbank and the government
has made the banking sector able to obtain capital satisfactorily and thus to have been able to maintain lending to
firms and households.
The major banks’ borrowing from the
Riksbank
The Money and Banking statistics present information on
individual banks that took part of the Riksbank’s lending
in the autumn. As mentioned above, it concerns loans in
both USD and SEK. The graph shows that all major banks
have raised loans in the Riksbank. Overall, their borrowing
amounts to over SEK 400 billion of which approximately
half are in foreign currency, mainly USD.
Source:Financial
marketstatistics
What do statistics say on corporate credit
crunch
Banking sector lending to the non-financial corporate sector
throughout 2008, including the fourth quarter 2008, has
been stable. On average, the value of loans increased by
about 1 percent per month. Does that mean that the dour
headlines about the credit collapse of the non-financial
companies are exaggerated? If you add the fact that the
Swedish companies actually have increased their deposits
in the banking system during the same period, then the
image of a business sector that both can obtain loans from
banks and also have relatively large funds invested in bank
accounts, is reinforced.
Banks lending and deposits vis-a-vis nonfinancial corporations 2008
Percent change compared to previous month
15
12
Riksbank lending to major banks
SEK billion
350
300
250
200
150
100
50
0
Deposits
9
6
450
400
SEB
SEB
SHB
SEB
SHB
Nordea
Nordea
Danske bank
Danske bank
Swedbank
Swedbank
Swedbank
Oct -08
Nov -08
Dec -08
Source:Financial
marketstatistics
Data up to and including December 2008
3
SHB
0
Nordea
-3
Danske bank
Data up to and including December 2008
Lending
-6
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source:Financial
marketstatistics
Data up to and including December 2008
In order to better form an opinion on any funding difficulties
for the corporate sector, further information is needed about
their access to financing abroad. Statistics Sweden’s balance
sheet statistics show, among other things, the corporate
23
The Swedish economy – published March 2009
sector borrowing from abroad, both through securities and
conventional bank loans. It appears that the value of both
types of loans has increased during the autumn of 2008. At
first sight, it appears that the non-financial companies have
not either been hit by a credit crunch from foreign creditors.
Again, a weaker SEK increases the value of foreign currency
liabilities and distorts our interpretation somewhat. But
aside from the exchange rate, we have not seen any significant net repayments of corporate borrowing abroad. This
is not particularly surprising, since the stock of corporate
loans is mainly long-term and very few loans seem to have
matured during the autumn. It means, on the other hand,
that the corporate sector may face problems later on with
refinancing their existing loans.
Non financial corporations' loans from abroad
SEK billion
350
300
vast majority of Swedish companies issuing securities abroad no new borrowing has taken place. On the other hand,
statistics give no evidence so far that the companies have
been forced to repay their securities lending. What is not reflected in statistics, of course, are those loans the enterprises
would like to have, regardless of financial means, but were
declined by creditors.
Non financial corporations' securities issues
abroad
SEK billion
300
Bonds
200
150
Short term
Long term
100
250
50
200
0
150
Q4
-06
Q1
-07
Q2
Q3
Q4
Q1
-08
Q2
Q3
Q4
Source:Nonfinancial Data up to and including fourth quarter 2008
corporations–shorttermassetsandliabilities
100
50
0
Certificates
250
Q4
-06
Q1
-07
Q2
Q3
Q4
Q1
-08
Q2
Q3
Q4
Source:Nonfinancial Data up to and including fourth quarter 2008
corporations–shorttermassetsandliabilities
It is difficult to deduce from the statistics whether there are
categories of companies that have had extraordinary difficulties with the credit supply. Media often highlight how
especially small and medium-sized companies have had
difficulties with the external funding. This means that there
may be a crowding out effect; where the major Swedish
companies increasingly have turned to their Swedish home
market for loans, thereby “taking precedence in the queue”.
The Riksbank, in its publication “The Riksbank’s company
interviews in December 2008 – January 2009”, states that
every two interviewed companies indicated that access to
external financing has deteriorated in the fourth quarter of
2008. The Riksbank states, however, that most companies
interviewed so far have managed to get loans in different
ways. “This applies particularly to the large companies” the
Riksbank points out.
Again it is the larger companies that dominate as regards
the ability to get capital through the issuance of securities
abroad. The upturn in the fourth quarter of the companies’
securities lending abroad is explained by that exchange rate
effect and a few major issues of a very limited number of
companies. It has apparently been “windows” on the capital
markets for new issues that probably have been open only
for a very small number of creditworthy companies. For the
The Swedish economy – published March 2009
In a second wave, the crisis comes back to
the financial sector
Some effects of the economic crisis in financial aggregates
have been shown in this article. Rapid action by the government and the Riksbank has facilitated banks maintaining a
relatively well-functioning credit market. Financial statistics
of banks and enterprises have thus come to reflect just that.
The statistics show among other things that during September to November 2008 there was a near-halt for securities
borrowing abroad for the Swedish private sector. Banks
amortized over SEK 400 billion during the period. In large
part this was replaced by loans from the Riksbank. It appears that the international capital markets have eased
somewhat in late 2008 and early 2009.
The sharply weakened SEK since September last year has
meant that both assets and liabilities in foreign currency
have risen in value. This has for example offset the above
mentioned amortizations of securities.
Various studies and the media testify that the non-financial
companies have been facing great difficulties in getting
credit during autumn and winter. This is most likely also a
fact. However, this is not particularly clear in the financial
statistics.
The economic crisis will last for some time. Probably, it will
have larger impact on banks and corporate balance sheets
in the coming years. The crisis will most likely in the near
future have an impact on banking sector profits, not least by
increasing credit losses.
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A bit speculatively, it can be said that the financial crisis
originated in the financial sector. It went on very rapidly to
also become a real economic crisis. In a second wave, the
crisis comes back to the financial sector with loan losses,
profits dropping and probably declines in assets and liabilities. How this will turn out in statistics and in other ways
remains to be seen.
It is noted that the impact of the crisis has been more clearly
reflected in the real economic statistics. One possible conclusion of the article can thus be that the financial statistics
are not sufficiently sophisticated to quickly reflect the effects
of a financial crisis but that it rather can contribute to the
analysis and also may indicate that, for example, financial
imbalances are built up nationally as well as globally.
In this article no review has been made of the Swedish
banks’ exposures to the Baltic countries, or of the banks’
profits and losses incurred. In the current situation, the
claims of the Swedish banks in the Baltic area are about
SEK 700 billion. There may be reasons to come back with
a more detailed description of developments in the Baltic
countries and other more country-specific exposures from a
balance sheet and income perspective.
Contact person: Anders Lindström, 08-506 949 09
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The Swedish economy – published March 2009
Publisher:
Monica Nelson Edberg
For more information on this publication, please contact:
Leif Munters, editor
08-506 945 09
Caroline Ahlstrand
08-506 943 33
Bo Bergman
08-506 945 42
Claes-Håkan Gustafson
019-17 61 19
Hans-Olof Hagén
08-506 944 66
Eva Hagsten
08-506 942 27
Vera Norrman
08-506 943 04
Bo Sandén
08-506 946 94
Tomas Thorén
08-506 941 46
Co-authors:
Anders Lindström, Financial markets
08-506 949 09
Graphic format and web publishing:
Monica Andersson
08-506 943 62
Arne Orrgård
08-506 950 73
Inquiries also by e-mail: first [email protected].
The Swedish economy – Statistical perspective
ISSN 1653–3828
URN:NBN:SE:SCB-2009-A28TI0901ENG_pdf (pdf)
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