2021-06-23
Swedish Economy Report June 2021
Output gap will close at the end of 2021 but labour market will lag behind
The economic recovery will accelerate in the second and third quarters this year despite shortages of materials and logistical issues putting a damper on industrial production and exports. Such are the results of the latest forecast from the National Institute of Economic Research (NIER).
The Swedish economy recovered further in the first quarter despite still high levels of Covid-19 and continued restrictions and requirements for social distancing. The successful vaccination campaign will contribute to a sharp fall in infections over the summer and a gradual reopening of society. This means that the economic recovery will accelerate in the second and third quarters despite shortages of materials and logistical issues putting a damper on industrial production and exports.
The output gap is expected to close at the end of this year, but the labour market will lag behind, with unemployment still above 7 per cent at the end of 2022. The rapid economic recovery means that most of the temporary fiscal measures introduced in response to the pandemic can be phased out during the third quarter. This means that net lending will be in line with the surplus target next year, with more fiscal space than normal.
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|
GDP, Market Prices | –2.8 | 4.4 | 3.5 | 1.7 | 1.7 | 1.7 |
GDP per Capita | –3.5 | 3.9 | 3.0 | 1.2 | 1.2 | 1.3 |
GDP, Calendar-Adjusted | –3.0 | 4.4 | 3.5 | 1.8 | 1.7 | 1.9 |
GDP, World | –3.7 | 5.8 | 4.1 | 3.3 | 3.1 | 3.1 |
Current Account Balance (1) | 5.7 | 6.9 | 6.1 | 5.4 | 4.9 | 4.6 |
Hours Worked (2) | –3.8 | 3.3 | 2.9 | 1.0 | 0.4 | 0.6 |
Employment | –1.3 | –0.4 | 2.0 | 1.1 | 0.4 | 0.5 |
Unemployment Rate (3) | 8.3 | 8.7 | 7.6 | 6.9 | 7.0 | 7.0 |
Labour Market Gap (4) | –4.5 | –2.1 | –0.1 | 0.2 | 0.0 | 0.0 |
Output Gap (5) | –3.7 | –1.4 | 0.2 | 0.2 | 0.0 | 0.0 |
Hourly Earnings (6) | 2.1 | 2.6 | 2.3 | 2.7 | 3.0 | 3.2 |
Hourly Labour Costs (2.7) | 3.9 | 1.9 | 1.7 | 3.0 | 3.1 | 3.2 |
Productivity (2) | 0.6 | 1.3 | 0.6 | 0.9 | 1.2 | 1.3 |
CPI | 0.5 | 1.7 | 1.6 | 2.3 | 2.2 | 2.5 |
CPIF | 0.5 | 1.9 | 1.7 | 2.2 | 2.0 | 2.0 |
Repo Rate (8,9) | 0.00 | 0.00 | 0.00 | 0.00 | 0.25 | 0.50 |
10-year Government Bond Yield (8) | 0.0 | 0.4 | 0.7 | 1.1 | 1.5 | 1.8 |
Effective Krona Exchange Rate Index (KIX) (10) | 118.5 | 114.3 | 114.9 | 115.0 | 115.0 | 115.0 |
Government Net Lending (1) | –3.0 | –1.5 | 0.3 | 0.4 | 0.3 | 0.4 |
Structural Net Lending (11) | –1.1 | –0.4 | 0.3 | 0.3 | 0.3 | 0.3 |
Maastricht Debt (1) | 39.7 | 37.4 | 33.5 | 31.6 | 30.9 | 30.3 |
- 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.
