To determine forecast accuracy, Consensus Economics examined the GDP and consumer price forecasts SEB and other banks submitted in response to monthly surveys conducted between January 2020 and December 2021. The research firm then used mean absolute error analysis to compare these forecasts to the reported outturns.
“I believe we in SEB are putting more effort and resources into making forecasts compared to our competitors, particularly concerning international economics. We often come out well in surveys from Prospera, which measure what our customers think,” says Håkan Frisén, head of Economic Forcasting at SEB.
Frisén says he is skeptical of using unnecessarily complex models when making forecasts, something he learned when working at Sweden’s Ministry of Finance in the early 1990’s. Back then Sweden was fighting a severe financial crisis.
SEB’s customers, both large and small, are showing great interest in the bank’s economic forecasts. Not least how actions from central banks affect inflation and economic growth.
“Keeping a close eye on Sweden’s Riksbank and other central banks is important to gauge how other economic indicators develop. Admittedly, we also need some measure of luck to be successful,” says Olle Holmgren, who tracks central banks closely and is SEB’s main inflation forecaster.
SEB is currently forecasting Sweden’s economy will grow 2.0 per cent this year and 3.0 per cent in 2023. Consumer price inflation is set to reach 3.1 per cent this year before falling back to 1.7 per cent in 2023. Frisén and Holmgren believe the Riksbank, Sweden’s central bank, will raise its key rate to 0.25 per cent in June. The rate is currently at zero.