Go to search feature Go to content

US will make a hard landing and Sweden a soft landing

After a hard US landing, America's economic curve will be U-shaped. The Fed will slash its key rate to 4.25 per cent before autumn. Recovery will come late this year, but GDP growth will not return to boom-year levels. Growth in 2001 will be 1.6 per cent, next year 2.3. The American stock market may decline further, before the Fed's rate cuts convince the market that a recovery is on the way.
 
Sweden is affected more than many other European countries by the American deceleration. But the weak krona provides support for exports. Due to strong employment, tax cuts and rising disposable income, the slowdown will be modest. Sweden will make a soft landing, with 3.0 per cent GDP growth this year and 2.8 per cent in 2002.
 
Half of this year's wage round remains. In the domestic sector, pay demands are unrealistically high and labour disputes are likely before collective agreements are reached at levels consistent with price stability.
 
Inflation is gradually climbing, partly due to import prices. But good productivity growth, lower oil prices and deregulation will help keep it just below the 2 per cent target. The Riksbank (central bank) will leave its repo rate unchanged at 4.0 per cent all year
 
You will find SEB's Nordic Outlook - an economic outlook for the coming years -on www.seb.net under the headline Newsletters.