Signs of an economic upturn
According to KI (Konjukturinstitutet - the National Institute of Economic Research), the confidence among Swedish businesses and households has strengthened. Growth may be on its way back, although it may take a little help from Riksbanken (the central bank of Sweden).

Following a steep slope last fall, it seems Sweden is set for growth again, from the second half of 2012. The Director of KI, Mats Dillén recommends the Riksbank to cut its repo rate. KI has calculated the effects of a reduction of 0.5% points to 1% this summer, and can see just benefits and very few risks. According to Dillén, it’s mostly about striking out against the unemployment, which threatens to stay at an increased level and make it impossible for long-term unemployed to get back on track. The interest rate cut can also provide more features of recovery.

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“With such a profile of the monetary policy, you get the inflation up, so that it comes a bit nearer the inflation target,” Dillén says. But he’s not counting on Riksbanken to listen. The great uncertainty surrounding how much spare capacity there in fact is in the economy is an obstacle. “It is possible that the Riksbank sees all too high inflation risks, which we don’t but they might have come to a different conclusion,” Dillén says. Members of the executive board at Riksbanken have also expressed worry over the credit growth, according to Dillén. KI doesn’t count on any major impetus coming from the finance politics in the next few years, in spite of the fact that 2014 is an election year, at least not if the surplus target of 1% of the public finances over the economic cycle is to be achieved. “In relation to that goal, there are no large margins,” Dillén continues. When asked whether the Swedish economy has now reached bottom, Prime Minister Fredrik Reinfeldt said: “I am always cautious about trying to determine the position of the economy, but the indicators have begun to move from very dark to looking brighter.”

For more info, see Konjunkturinstitutet