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A lot of new data and insights have been released since our last Mundus Take in Mundus Business Insights. March saw international financial markets wobble, with fears of inflation breaking out. Some Swedes rushed out to fix their home mortgages, but policymakers were nonplussed, downplaying the likelihood of prices rises in Sweden. March data on inflation supports the official view, with the rate currently running at 1.8%, and forecast to fall further during the year, as energy price changes fall out of the numbers and with the higher Krona exchange rate suppressing import costs. The balance of risks suggests that the repo rate is more likely to fall than rise. Meanwhile, household spending, the GDP indicator and the Government’s net financing needs all looked good. And housing prices continued to skyrocket. The Swedish economy is now closing in on the GDP level that it was at prior to the pandemic.
The Ministry of Finance issued a press release describing the economy as “resilient”, and that 2021 GDP growth would hit 3.2%. Nordea decried the Government’s forecast of the Swedish economy as “gloomy”, predicting a more upbeat 4.0%. Although there are good reasons for optimism to remain subdued – obviously the pandemic inflections rates are very bad at present, as are lockdown conditions, we believe that the motors in Sweden’s export-led economy could begin to roar as we head into summer. This is the focus of our April Mundus Brief, which considers the statement by Swedish economist Kjell A Nordström that “Sweden has built a technological Ferrari that so far has only been driven at 20 km/hour,” and asks,“ will the Government gun it down the straight?