Download Swedish Economic Trends

Swedish Economic Trends
September 2007
Sources of GDP Growth
(%y-o-y)
Economic Growth
4
2
0
-2
Mar-00
 Net exports have become a negative
influence on overall growth. Export
growth has slowed as global demand
has decelerated.
 Economic growth has led to rising
capital utilisation. Increased investment
spending by firms has ameliorated the
situation but the degree of capacity
utilisation is the highest for the past two
decades.
 As a result of ongoing economic growth,
employment has been rising during the
past three years. Employment has
accelerated through the past year rising
above 2% y-o-y.
 Unemployment has been declining since
the peak in 2004. The unemployment
rate began to fall more rapidly last year
and has moved down towards 4%.
Mar-04
Mar-06
Stocks
Net exports
*GDP
Stocks are contribution to growth
Fixed Capital Investment
(% y-o-y)
Private Consumption
(% y-o-y)
30
6
Dwelling
20
4
10
0
2
-10
Non-Dwelling
0
-20
-2
Mar-93
Mar-98
-30
Sep-93
Mar-03
21
Sep-96
Sep-99
Sep-02
Sep-05
Current Account
(% of GDP)
Exports and Global Demand
(% y-o-y)
Consequences of Economic Growth
 Despite the deterioration of net exports,
the current account remains in a surplus
of 6% of GDP.
Mar-02
Domestic sales
 Private consumption growth has been
steady at 2.5%-3.0% during the past
twelve months.
 Investment spending has been the most
rapidly growing element of economic
activity. Investment has grown by close
to 10% y-o-y.
Sep-06 Dec-06 Mar-07 Jun-07
Consume2.5
2.6
2.5
2.6
Govt
2.1
2.3
1.9
1.9
Invest
7.0
8.9
9.9 10.0
Stocks* 0.9
-0.4
0.9
0.3
Exports 6.3
7.5
6.4
5.5
Imports 6.9
8.3
9.8
7.5
GDP
4.2
4.3
3.4
3.2
6
 GDP grew by 3%-3.5% during the past
twelve months, a deceleration from the
pace of 2006.
 Domestic demand, particularly private
sector expenditure, has been the
dominant expansionary force.
Real GDP
(%y-o-y)
6
9
Exports
14
4
7
2
0
0
6
3
0
-7
Mar-85
Trading partner growth (rhs)
Mar-90
Mar-95
Mar-00
-2
Mar-05
Capacity Utilisation
(%)
-3
-6
Mar-92
Mar-95
Mar-98
Mar-01
Mar-04
Labour market
(% of labour force)
Mar-07
(%)
2
92
4
Employment (rhs)
89
4
1
86
6
-2
83
8
-5
Unemployment
80
Mar-85
Mar-90
Mar-95
Mar-00
Mar-05
10
Mar-85
-8
Mar-90
Mar-95
THIS DOCUMENT IS FOR INFORMATION PURPOSES ONLY AND IT SHOULD NOT BE REGARDED AS AN OFFER TO SELL OR AS A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES OR OTHER INSTRUMENTS MENTIONED IN IT. NO PART OF THIS DOCUMENT MAY BE REPRODUCED IN ANY MANNER WITHOUT THE WRITTEN PERMISSION OF
PENRICH CAPITAL. WE DO NOT REPRESENT THAT THIS INFORMATION, INCLUDING ANY THIRD PARTY INFORMATION, IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE
RELIED UPON AS SUCH. IT IS PROVIDED WITH THE UNDERSTANDING THAT PENRICH CAPITAL IS NOT ACTING IN A FIDUCIARY CAPACITY. OPINIONS EXPRESSED HEREIN
REFLECT THE OPINION OF PENRICH CAPITAL AND ARE SUBJECT TO CHANGE WITHOUT NOTICE. THE PRODUCTS MENTIONED IN THIS DOCUMENT MAY NOT BE ELIGIBLE
FOR SALE IN SOME STATES OR COUNTRIES, AND THEY MAY NOT BE SUITABLE FOR ALL TYPES OF INVESTORS.
Mar-00
Mar-05
Inflation
 Consumer price inflation accelerated in
the past year and is now close to the
central bank’s target of 2%.
 Inflation has accelerated across most
categories of consumer prices with
transport and clothing prices being the
notable exceptions. Lower oil prices in
early 2007 reduced transport prices.
 Labour productivity has decelerated this
year as economic growth has slowed. In
the past twelve months, labour
productivity has grown by 2%.
 Wage inflation has been steady for most
of the past three years, remaining at
about 3% per annum. In conjunction
with labour productivity growth, this has
led to generally static unit labour costs.
Consumer Price Inflation
(%y-o-y)
Consumer Price Inflation
(% y-o-y)
2005
2006 2007
Total
0.5
1.4
1.9
Core
0.8
1.2
1.1
Food
-0.7
0.8
1.6
Clothing
-1.1
3.2
2.5
Housing
0.4
3.5
4.1
Health
2.3
0.5
2.0
Transport
4.3
1.6
-0.3
Communicate -6.2
-6.5
-4.7
Recreation
-1.7
-1.4
-0.1
10
8
6
Riksbank Target
4
2
Underlying
0
Headline
-2
Mar-85
Mar-90
Mar-95
Mar-00
Mar-05
Labour Productivity
(% y-o-y)
Unit Labour Costs and Wages
(% y-o-y)
6
6
4
4
2
2
0
0
Wages
ULC
Government Policy
 The government accounts have been in
surplus for most of the past decade.
Expenditure has been stable in recent
years after the widespread spending
cuts enacted after the mid 1990s crisis.
 Ongoing fiscal surpluses have allowed
the government to gradually reduce its
debt level. Debt is close to 50% of GDP.
 The Riksbank has increased official
short-term interest rates by 2.25% since
the trough at 1.5% in 2005. Because
inflation was substantially below target
until this year, the Riksbank was one of
the last major central banks to begin
raising rates. Real interest rates are still
below 2%.
 The Krona has been stable during the
past year after the appreciation of
2005/2006. In real terms, the currency is
still low by historical standards.
-2
Mar-85
 Despite very low interest rates and
rapidly rising asset prices, household
savings have remained relatively high.
Mar-95
Mar-00
Mar-05
Mar-95
Fiscal Balance
(% of GDP)
71
Mar-00
Mar-05
Government Debt
% of GDP)
6
Balance (rhs)
90
75
66
0
61
60
45
Revenue
-6
30
15
Expd
56
-12
1985
1989
1993
1997
2001
0
1985
2005
1993
1997
2001
2005
125
12
Nominal
9
115
105
6
3
0
Mar-85
1989
Real Trade-Weighted Krona
(J.P. Morgan Index)
Official Interest Rates
(%)
Other Developments
 House prices have risen rapidly in
recent years, probably fuelled by low
interest rates. House price inflation has
averaged close to 10% in the past three
years.
Mar-90
-2
Mar-90
95
Real
Mar-90
Mar-95
Mar-00
Mar-05
85
Jan-90
Jan-95
Jan-00
Jan-05
Household Savings Rate
(% of Disposable Income)
House Prices
(% y-o-y)
12
20
9
15
6
10
3
5
0
0
-5
Mar-90
-3
-6
Mar-95
Mar-00
Mar-05
1985
1990
THIS DOCUMENT IS FOR INFORMATION PURPOSES ONLY AND IT SHOULD NOT BE REGARDED AS AN OFFER TO SELL OR AS A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES OR OTHER INSTRUMENTS MENTIONED IN IT. NO PART OF THIS DOCUMENT MAY BE REPRODUCED IN ANY MANNER WITHOUT THE WRITTEN PERMISSION OF
PENRICH CAPITAL. WE DO NOT REPRESENT THAT THIS INFORMATION, INCLUDING ANY THIRD PARTY INFORMATION, IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE
RELIED UPON AS SUCH. IT IS PROVIDED WITH THE UNDERSTANDING THAT PENRICH CAPITAL IS NOT ACTING IN A FIDUCIARY CAPACITY. OPINIONS EXPRESSED HEREIN
REFLECT THE OPINION OF PENRICH CAPITAL AND ARE SUBJECT TO CHANGE WITHOUT NOTICE. THE PRODUCTS MENTIONED IN THIS DOCUMENT MAY NOT BE ELIGIBLE
FOR SALE IN SOME STATES OR COUNTRIES, AND THEY MAY NOT BE SUITABLE FOR ALL TYPES OF INVESTORS.
1995
2000
2005