Download Swedish Economic Trends

Swedish Economic Trends
March 2011
Sources of GDP Growth
(%y-o-y)
Economic Growth
8
 GDP growth resumed in 2009 and
accelerated to 7% in 2010.
 The acceleration was dominated by an
expansion of private sector expenditure.
 Private consumption began rising in
2009 and, supported by rising
employment, grew by 4% in 2010.
 Investment spending fell very sharply
during the 2008/2009 recession and
rebounded by 10% in 2010. As a
percentage of GDP, investment is now
close to historical norms.
 Firms began restocking in 2010 and
inventories made a sizeable contribution
to economic growth during the year.
 Resumed expansions in Sweden’s
trading partners led to rapid growth in
exports. However, imports grew just as
rapidly so net exports did not make any
contribution to growth.
Real GDP
(%y-o-y)
Real GDP Growth
(% y-o-y)
Mar-10 Jun-10 Sep-10 Dec-10
Consume 3.6 2.43.6 4.4
4
0
Govt 1.3
Invest
-1.3
Stocks* 0.8
-4
-8
Mar-05
Mar-07
Domestic sales
2.6
2.4
2.9
5.6 11.7
2.4 2.5
10.0
1.8
Mar-09
Stocks
Net exports
*GDP
Stocks are contribution to growth
Change in Inventories
(% of GDP)
Private Consumption
(% y-o-y)
2
6
4
1
2
0
0
-1
-2
-2
Mar-93
-4
Mar-93
Mar-98
Mar-03
Mar-98
Mar-03
Mar-08
Mar-08
Current Account
(% of GDP)
Exports and Global Demand
(% y-o-y)
16
12
5
Exports
Consequences of Economic Growth
 The current account has been in surplus
for the past decade and a half. The
surplus in 2010 was equivalent to 6% of
GDP.
 Surveys of firms indicate that the
recovery in output has resulted in a
rebound in capacity utilisation. The
degree of utilisation is no longer low by
historical standards.
 Employment resumed growing in late
2009. The number of people employed
rose by 2% through 2010.
 The unemployment rate peaked at just
below 6% in early 2010. During the past
year, unemployment has declined
towards 4% which is low by historical
standards.
10
3
8
4
1
4
-2
-1
0
Trading partner growth (rhs)
-8
-14
Mar-90
-3
Mar-95
Mar-00
Mar-05
-5
Mar-10
-4
Mar-92
Mar-96
Mar-00
Mar-04
Mar-08
Labour market
(% of labour force)
Capacity Utilisation
(%)
(%)
2
4
89
4
1
86
6
92
-2
Employment (rhs)
83
8
80
77
Mar-90
-5
Unemployment
10
-8
Mar-85 Mar-90 Mar-95 Mar-00 Mar-05 Mar-10
Mar-95
Mar-00
Mar-05
Mar-10
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.
Inflation
 Consumer price inflation has moved
back up to the Riksbank’s target of 2%.
 “Underlying” inflation has been similar to
overall inflation. High oil prices do not
appear to have had a substantial impact
upon transport prices during 2010.
 The sharp rebound in economic activity
has led to an equally sharp rise in labour
productivity which rose by 4% during
2010.
 Wage inflation was lower in 2009 and
2010 than in previous years. Nominal
wages rose by 3% last year.
 The combination of slower wage
inflation and a sharp rise in labour
productivity led to a drop in unit labour
costs.
Government Policy
 The 2008/2009 recession pushed the
government accounts back into small
deficits during the past two years.
 Previous fiscal surpluses had allowed
the government to reduce its debt level
below those of many developed
countries.
Hence,
despite recent
deficits, Government debt is still barely
50% of GDP.
Consumer Price Inflation
(%y-o-y)
10
8
6
Riksbank
4
Underlying
2
0
Headline
-2
Mar-85 Mar-90 Mar-95 Mar-00 Mar-05 Mar-10
Consumer Price Inflation
(% y-o-y) Dec-08 Dec-09 Dec-10
Total
2.4
-0.4
1.9
Core
1.9
1.9
1.7
Food
6.4
1.2
2.1
Clothing
-1.5
2.8
1.6
Housing
6.5
-8.9
4.0
Health
-4.2
4.3
2.4
Transport
-1.1
6.2
2.8
Communicate -5.6
-1.2
-1.8
Recreation
-2.5
0.6
-1.2
Labour Productivity
(% y-o-y)
Unit Labour Costs and Wages
(% y-o-y)
6
6
Wages
4
4
2
0
2
-2
0
-4
ULC
-6
Mar-95
Mar-00
Mar-05
Mar-10
-2
Mar-95
Fiscal Balance
(% of GDP)
Mar-10
6
90
Balance (rhs)
75
65
0
60
45
Revenue
58
-6
30
Expd
15
51
-12
0
1985
1985 1989 1993 1997 2001 2005 2009
1989
1993
1997
2001
2005
2009
Real Trade-Weighted Krona
(BIS Index)
Official Interest Rates
(%)
 The Riksbank has increased official
short-term interest rates since the
middle of 2010. However, at only 1.5%,
the repo rate is still extremely low by
historical standards and real interest
rates are negative.
12
135
9
125
 The krona has rebounded after the
sharp fall at the end of 2008 and early
2009. The currency is currently close to
historical norms in real terms.
-3
Mar-90
 Other Developments
20
15
15
12
10
9
5
6
0
3
 Despite very low interest rates,
household savings have remained
relatively high by historical standards.
Mar-05
Government Debt
% of GDP)
72
 The government loosened fiscal policy
in 2009 to cushion the decline in private
sector spending. No substantive further
actions are planned.
 Perhaps fuelled by low interest rates,
house prices have been rising again.
Prices rose by 5%-10% per year
through 2009-2010.
Mar-00
6
115
Nominal
3
105
0
95
Real
Mar-95
Mar-00
Mar-05
Mar-10
85
Jan-90
Jan-00
Jan-05
Jan-10
Household Savings Rate
(% of Disposable Income)
House Prices
(% y-o-y)
-5
0
-10
-3
-15
Mar-90
Jan-95
-6
Mar-95
Mar-00
Mar-05
Mar-10
1985
1990
1995
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.
2000
2005
2010