2020-04-01
Swedish Economy Report April 2020
Particularly deep economic downturn in the wake of COVID-19
The COVID-19 pandemic will hit the Swedish economy hard. Just how hard is currently very difficult to say, but a particularly deep economic downturn looms. Concern about infection and official advice to limit social contacts are putting a major damper on household demand, and delivery problems are disrupting production in parts of the business sector. Demand is also being adversely affected by drastic measures abroad to curb the spread of infection.
The NIER estimates that Sweden’s GDP will fall by just over 6 per cent in the second quarter. Economic policy is already adopting a strongly supportive role. The focus is on supporting the business sector and local government to prevent a wave of bankruptcies and mass unemployment. The NIER believes that this is an appropriate focus, but that more action than what has been decided or announced to date will be needed to stem the rise in unemployment. Relatively low government debt means that there is substantial scope to provide further support for the economy.
Great uncertainty
The NIER’s short-term forecasting models are of extremely limited value in the present circumstances. The economic developments presented in this report are therefore best viewed as a base scenario conditioned on a number of assumptions rather than an actual forecast. This base scenario is associated with very great uncertainty, and downside risks dominate. More details concerning the key assumptions underlying the base scenario can be found in the report.
2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|
GDP, Market Prices | 2.2 | 1.2 | –3.2 | 3.5 |
GDP per Capita | 1.0 | 0.2 | –4.0 | 2.7 |
GDP. Calendar-Adjusted | 2.3 | 1.3 | –3.4 | 3.4 |
GDP. World | 3.6 | 3.4 | –0.8 | 4.4 |
Current Account Balance (1) | 2.6 | 4.5 | 4.5 | 4.9 |
Hours Worked (2) | 1.8 | –0.3 | –3.6 | 2.0 |
Employment | 1.5 | 0.7 | –1.6 | 0.2 |
Unemployment Rate (3) | 6.3 | 6.8 | 8.7 | 8.9 |
Labour Market Gap (4) | 0.9 | –0.1 | –4.1 | –2.8 |
Output Gap (5) | 1.3 | 0.5 | –4.6 | –3.0 |
Hourly Earnings (6) | 2.5 | 2.6 | 2.0 | 2.2 |
Hourly Labour Costs (2.7) | 3.5 | 3.8 | 1.3 | 3.3 |
Productivity (2) | 0.5 | 1.7 | 0.1 | 1.5 |
CPI | 2.0 | 1.8 | 0.5 | 1.3 |
CPIF | 2.1 | 1.7 | 0.5 | 1.4 |
Repo Rate (8.9) | –0.5 | –0.3 | 0.0 | 0.0 |
10-year Government Bond Yield (8) | 0.7 | 0.1 | 0.0 | 0.3 |
Effective Krona Exchange Rate Index (KIX) (10) | 117.6 | 122.1 | 123.3 | 122.4 |
Government Net Lending (1) | 0.7 | 0.4 | –3.5 | –1.9 |
Structural Net Lending (11) | 0.1 | 0.3 | –1.3 | –0.2 |
Maastricht Debt (1) | 38.8 | 35.9 | 40.9 | 39.7 |
- Per cent of GDP.
- Calendar-adjusted.
- Per cent of labour force.
- Difference between actual and potential hours worked in per cent of potential hours worked.
- Difference between actual and potential GDP in per cent of potential GDP.
- According to the short-term earnings statistics.
- Refers to the hours of employees
- Per cent.
- At year-end.
- Index 18 November 1992=100.
- Per cent of potential GDP.
Sources: IMF, Statistics Sweden, National Mediation Office, Sveriges Riksbank, Macrobond and NIER.
