The impact of the crisis in Sweden

The European debt crisis has reached Sweden. Many forecasters, including for the Swedish government, believe this downturn will be short. But nothing supports this scenario. On the contrary, reality has caught up to the European economies, so Swedish growth recovery won’t return to normal for several years. For 2012 The Confederation of Swedish Enterprise expect growth of only 0.2 percent.

“We are not seeing an ordinary recession, but rather a structural debt crisis, which will remain deep for long. Any recovery will demand significant political reform. But in the best of scenarios, we see normal growth returning to Europe and Sweden only in a few years,” comments Stefan Fölster, Chief Economist at the Confederation of Swedish Enterprise.

The downturn in the Swedish economy will be substantial in the coming quarter, starting with larger companies, especially those exporting to Europe. But, we see those that export to China and Asia doing better. As suppliers to European exporters become affected, the negative spiral of the crisis will spread throughout the Swedish economy.

Industrial regions will experience the greatest negative effects in 2012, except for regions with significant mining industries.

Many local governments have been entirely too optimistic in their budgets, and will be forced to cut back when tax revenues don’t meet forecasts. But we do see that local governments who have worked to improve the local business climate are now facing the crises with greater stability,” concluded Mr. Fölster.

The Confederation of Swedish Enterprise Q3 Economic report is titled “Reality check”.

2011-10-04
Confederation of Swedish Enterpriseshttp://www.svensktnaringsliv.se/english/long-road-to-reach-end-of-tunnel_141275.html