OECD: Sweden’s growth is dampened considerably …

Sweden’s economic growth has been strong, but expected to decrease significantly over the next two years.

the Shortage of workers and buildable land will dampen residential investment, uncertainty about the global demand and weak exports are holding back business investment and moderate wage increases dampen consumer spending.

It writes the OECD, the industrialised countries of the economic cooperation organization, in its autumn forecast, the Economic Outlook, which was announced on Monday.

the OECD forecast that Sweden’s GDP will grow 3.3 per cent this year and 2.7 per cent in 2017. The year 2018 is expected a GDP growth of 2.2 per cent. In the spring forecast saw the OECD, GDP would increase by 3.4 per cent this year and 2.8 per cent in 2017.

the Unemployment rate flattens out when an increasingly larger part of the unemployed consists of jobseekers with low qualifications are far from the labour market, including newly arrived migrants. A tighter labour market is deemed to gradually help to lift inflation.

the OECD notes that the current very expansive monetary policy stance is a response to a persistent low inflation, but also have a fire on a long “boom” in the housing market, which poses growing risks.

“Stronger” macro-prudential supervision, as a loan in relation to income, is required in order to reduce the financial and macroeconomic vulnerabilities. Simplified plan and hyresregleringar and reformed fastighetskatt would help to stabilise house prices, increasing labour mobility and improving gender equality,” writes the OECD, which also takes up to avtrappade interest deductibility would mitigate the husprisökningarna.

note that The repo rate has remained at -0,50% since the middle of February, which has pushed up prices and inflation expectations, but the recent outcomes has been weak.

The real wage growth is held back by the leading role played by the competitive export industry has in the collective wage negotiations.

“the Salaries will, however, increase when the expansionary monetary policy raises inflation expectations. The high savings rate, partly related to the uncertainty and interest payments, limits consumption growth even further”, writes the OECD.

the Organization notes that Sweden has enough fiscal space as the government debt ratio is low and the budget close to balance. The decision to lower the surplus target from 1 percent of GDP to 0.33 percent of GDP increases the fiscal space somewhat in the coming years.

“There is little need for further economic stimulus, given the strength of the economy. But it is to be welcomed if the fiscal space is used for the temporary costs related to the migration,” according to the OECD adds that in the longer term, the immigration to increase employment, provided that the integration is successful.

the OECD notes that Sweden is a small, open economy that is highly integrated in the global value chains, and therefore are especially vulnerable to weak international handelstillväxt and the development of their trading partners, including China and the united kingdom.

“the exchange rate fluctuations would affect the output, inflation and monetary policy. Interest rates expected to remain low for some time, and a failure to rein in household debt could increase the financial risks and household vulnerability to downturns in house prices and future interest rate increases,” warns the OECD.

Rev designed revision from the previous forecast in June 2016.