On Wednesday, the Ministry of Finance revised upwards its forecast for growth to between 2 and 2.5% up until 2020. Net lending has been revised up to SKr 85 billion, and the unemployment rate is expected to be 6.3% in 2018.
The figures show there are major differences between various groups: the native-born unemployment rate is under 4% while the foreign-born employment rate is almost 14%.
Ulf Kristersson, the Moderates’ spokesman on economic policy, accuses the government of wasting the boom in the economy, and calls for long-term reform linked to jobs, integration and the housing market.
The government has said that the number of children and older people in Sweden will increase significantly and forecasts that investment in public welfare services will need to increase by SKr 40 billion by 2025.
Kristersson shares this view, but is critical of government claims that there is no scope for tax cuts, saying this is “qualified nonsense”.
Anna Bremen, chief economist at Swedbank, has said that growth in the Swedish economy remains healthy, but for it to remain so the labour market must continue to display strong growth. She expects the economy to slow more clearly in 2017 and 2018.
Both she and SBAB chief economist Tor Borg point out that low interest rates and rising property prices have fuelled consumption and investment. Many consumers have money to spend, which has resulted in a boom for Sweden’s restaurant business; sales in the industry rose 5.1 per cent in June. Dark clouds are looming on the horizon, however.
“Uncertainty lies ahead in that there is a general concern in the outside world that may spread,” says Anna Bremen, naming Brexit, the US presidential election, the military coup in Turkey and this summer’s terror attacks in Europe, all of which can curb investment and consumption.
The Swedish economy will grow at a faster pace than many have forecast, says the multinational investment banking firm Goldman Sachs, predicting “solid” economic growth of 2.9% this year and 3.6% in 2016. Falling oil prices and the sharp depreciation in the krona favour an industrialised, exporting country such as Sweden, argues the firm.