2013-10-19 11:48:22 - New Country Reports market report from Business Monitor International: "Sweden Business Forecast Report Q4 2013"
Sweden's status as an open trade-oriented economy means that weak European demand poses significant downside risks to Swedish growth.
We are becoming increasingly optimistic towards the fortunes of the Swedish economy, after several quarters of acute weakness, with private consumption remaining one of the key drivers of growth.
Sweden is among the best positioned developed economies in the world, with a highly productive workforce, a fiscal surplus and a stable banking system.
Major Forecast Changes
Our forecasts for real GDP growth in 2013, 2014 and 2015 are 1.1%, 2.7% and 2.9%, respectively, down from our previous forecast of 1.5% for 2013 but up for both 2014 (from 2.5%) and 2015 (from 2.7%).
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We have raised our end-2013 and 2014
repurchase rate forecasts by 25bps apiece to 1.00% and 1.25% from 0.75% and 1.00%, respectively.
Key Risks To Outlook
Downside Growth Risks From Europe: A relapse in the European economic recovery would leave Sweden's open economy vulnerable to external demand shocks.
Partial Table of Contents:
Major Forecast Changes
Key Risk To Outlook
Chapter 1:Political Outlook
BMI Political Risk Ratings
Opposition Still On Track To Win In 2014
- The left-wing opposition is clearly on track to win the September 2014 election, defeating Prime Minister Fredrik Reinfeldt's ruling centre-right coalition. With one year left to go before the election, we look at the state of play in parliament and outline possible outcomes.
TABLE: DOMESTIC POLITICS
Long-Term Political Outlook
Stability Assured Over Long Term
- With a long-term political risk rating of 94.5 (out of 100), Sweden is rated among the most structurally stable countries in the world. Benefiting from an advanced level of institutional development, a long history of democratic governance and an established foreign policy based on neutrality, the country faces limited underlying risks to political stability over the long term. We stress, however, that Sweden is in the process of a shift in economic policy towards greater liberalisation and foreign integration, which is expected to continue over the next 10 years.
Chapter 2: Economic Outlook
BMI Economic Risk Ratings
Growth Set To Accelerate
- We are forecasting Swedish real GDP growth to accelerate through the rest of 2013 and into 2014 as household consumption picks up, exports recover, and the government loosens fiscal policy. The major risks are rising levels of leverage for Swedish households, as well as elevated real estate prices.
TABLE: GDP BY EXPENDITURE, REAL GROWTH %
TABLE: GDP CONTRIBUTION TO GROWTH
Rate Hikes To Begin In Late 2014
- Sweden's Riksbank will begin raising its benchmark repurchase rate in 2014 as economic activity picks up. The biggest concern from a policy perspective is the high level of Swedish household debt, which is likely to force the Riksbank to hike only slowly for fear of derailing the nascent economic recovery.
TABLE: INTEREST RATES
Balance Of Payments
Current Account Surplus To Fall Gradually
- We forecast a modest narrowing of the Swedish current account surplus over the coming five years, from 6.0% of GDP in 2013 to 5.0% of GDP in 2017, as the trade surplus diminishes. Improving economic prospects in Sweden's key European export markets will help turn the tide of negative export growth, but on a net basis this will be offset by the strong krona and robust domestic demand boosting imports.
TABLE: CURRENT ACCOUNT
Chapter 3: 10-Year Forecast
The Swedish Economy To 2022
Well Positioned For The Long Term
- Sweden is one of the most strategically well-positioned economies in the developed world, and this is reflected in our 10-year growth forecasts, which expect steady expansion through to 2022. The balance of payments are extremely stable and will be buoyed by a robust current account surplus, fiscal dynamics are among the best in Europe, and the country will continue to benefit from a highly productive work force over the long term.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 4: Business Environment
BMI Business Environment Risk Ratings
Business Environment Outlook
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
TABLE: BMI LEGAL FRAMEWORK RATING
TABLE: LABOUR FORCE QUALITY
TABLE: TRADE AND INVESTMENT RATINGS
Chapter 5: Key Sectors
TABLE: FIXED LINE - HISTORICAL DATA AND FORECASTS
TABLE: INTERNET - HISTORICAL DATA AND FORECASTS
TABLE: MOBILE - HISTORICAL DATA AND FORECASTS
TABLE: MOBILE ARPU (SEK) - HISTORICAL DATA AND FORECASTS
Other Key Sectors
TABLE: INFRASTRUCTURE SECTOR KEY INDICATORS
TABLE: AUTOS SECTOR KEY INDICATORS
TABLE: PHARMA SECTOR KEY INDICATORS
Chapter 6: BMI Global Assumptions
Lowering EM Growth Forecasts
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
Full Table of Contents is available at:
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