the Swedish economy is stuck in a vise.
For the first clamped the growth of outside forces. The world economy seems to full of horrors. In Europe, weakening the economy again, while the united states slows. Trade wars and China's slower speed has put a damper on the mood in the manufacturing sector. Brexit is a thriller without end.
second, the domestic market is put under pressure. Decline in construction is expected to dampen Swedish growth noticeably in the year. At the same time, households have begun to moping. Not least, it is falling housing prices that get us to consume less and save more – which lowers domestic demand.
expect Nordea's economists with that Swedish growth in the year ends up at a modest 1 per cent. The risk of something even worse occurs is, according to analysts ' comments on Monday, is also palpable.
Now you need not to take out this accident in advance. That growth has been decent in a few years does not mean that the misery and crop failure is lurking around the corner. Some speak of the economy as if it followed a law of nature. It doesn't work.
however, What should worry is the political preparedness.
the Riksbank would not be able to fend off a sharp weakening of the economy. The bank claims that minusräntan has worked just fine. It says that the repo rate could be even lower, if needed.
However, a recession usually mean the central bank will cut by at least 4 percentage points. It is simply not possible. The experts are also not at all agree minusräntans merits.
Plan B is to launch new bond purchases to push interest rates. But it would be far from easy. The riksbank already takes up a considerable part of the Swedish national debt.
the government and the minister for finance Magdalena Andersson is ready if the economy is declining. That paragraph two of the parties, the so-called januariavtal also states that one should have the ” readiness for market fluctuations”.
however, there is not a lot of concreteness. Several reforms on the agenda is probably inappropriate if there will be a recession. To tear down and build up the employment agency from the ground up, just as hundreds of thousands of swedes of the job, would be such as a difficult project.
released state national institute of economic Research, KI, a report on what is known as the automatic stabilisers. Thus, the elements of the tax system and social insurance that can balance economic downturns.
The bad news is that the stabilizers have become weaker in the last 20 years. The good news is that there are ways to strengthen resilience.
A proposal, which the government is already inside, is to improve the conditions for short-term employment – a new system that makes it possible to go down in working hours during the crisis.
another is a konjunkturbaserad a cashier, that can be raised in an economic downturn. It is also possible to krissäkra the corporate tax rate.
the Risk is that the parties are staples stuck too hard in its 73-point programme. But if the crisis or trade war, that will they must act responsively, quickly and purposefully.
As good to prepare a plan already now.