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8/10/2019 Swedbank Economic Outlook Update, PowerPoint
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Swedbank
Table of Contents Executive Summary
Global Outlook:The global recovery is again losing steam Risk scenario: Downside risks dominate, but there is an upside Sweden: Adapting to a worse outlook EMU: Recovery paused, but probably still underway
US: Strong upswing in US growth, but there are limits
Emerging markets: Growth loses momentum Nordic area: Facing headwinds of various varieties Baltic countries: Cope with a weak external environment Appendix
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Executive Summary
The developed economies aregrowing apart, and emergingeconomies less alike
Downside risks dominate, butthere is an upside
Vulnerable Swedish and Baltic
economies cope with a weakexternal environment
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Risk scenario: Downside risks dominate, but there is an
upside Negative risks Deflation in the Eurozone remains
the largest risk.
Other negative risks are an
escalation of the Russia-Ukrainecrisis, an uncontrollable unravelling
of Chinese imbalances and volatilityin developed market financialsectors.
Positive risks
The strong policy action taken by theECB in combination with a
successful Asset Quality Review and
the bank stress test. The decrease in energy prices, most
notably oil price, could further boosthouseholds purchasing power.
0
10
20
30
40
50
60
70
Forecast risk scenarios (prob. in %)
Main
Main
Worse Wo
rse
Better
Better
Source: Swedbank
August '14November '14
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Sweden: Adapting to a worse outlook
Strong household demand makes up forfaltering export growth:
Export growth is affected by a weak
EMU and deteriorating Norwegian
economy Households will benefit from the
solid labor market developments andlower interest rates, as well as fromprevious tax rate cuts,
Monetary policy reacts strongly to threatof deflation
Faced with falling inflation and the
threat of deflation, it followed up its
50-basis-point cut of the repo rate inJuly by slashing the rate to zero inOctober and signalling its intensionto keep rates low until there are
significant signs of a pickup in prices
2.6
-0.3
1.5
2.1
2.6 2.9
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2011 2012 2013 2014 2015 2016
Sweden: Contribution to growth (%-points of GDP)
Public cons
Foreign balance
Stockbuilding
Gross fixed investment
Private cons
GDP
Sources: Statistics Sweden and Swedbank forecasts.
95
100
105
110
115
120
125
130
135
140
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
FX/FI: Inflation, the repo rate and the exchange rate
CPI y/y CPIF y/y Repo rate Krona (KIX-index, RH)
Sources: Riksbanken, Statistics Sweden and Swedbank
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Sweden: National accounts
Overall, we expect the Swedisheconomy to expand by 2.4% in 2015and 2.7% in 2016, compared with 2.2%this year.
A fine balance needs to be struck in
addressing the high household debtlevels
Fiscal policy grows in importance
while the government is weak
Swedbank's GDP Forecast - Sweden
Changes in volume, %
Households' consumption expenditure 2,1 2,8 (2,8) 2,5 (2,4) 2,1 (2,1)
Government consumption expenditure 1,6 1,0 (0,9) 2,1 (2,0) 1,9 (1,6)
Gross f ixed capital formation -0,1 4,3 (3,9) 5,6 (6,0) 5,8 (6,0)
private, excl. housing -1,1 -0,7 (-1,8) 3,8 (4,9) 6,4 (6,4)
public 0,2 5,7 (5,7) 5,1 (3,8) 3,4 (3,8)
housing 3,8 22,5 (22,3) 12,1 (10,6) 6,4 (6,4)Change in inventor ies1/ 0,0 0,2 (0,2) 0,0 (0,1) 0,0 (-0,0)
Exports, goods and services -0,5 2,2 (2,3) 3,8 (4,4) 5,6 (5,9)
Imports, goods and services -0,8 4,1 (4,1) 5,1 (5,7) 5,8 (6,2)
GDP 1,5 2,1 (1,9) 2,6 (2,6) 2,9 (2,7)
GDP, calendar adjusted 1,5 2,2 (2,1) 2,4 (2,3) 2,7 (2,5)
Domestic demand 1/ 1,3 2,5 (2,3) 3,0 (2,8) 2,8 (2,6)
Net exports 1/ 0,1 -0,6 (-0,6) -0,4 (-0,3) 0,1 (0,1)
1/ Contribution to GDP growth. So urces: Statistics Sweden and Swedbank
2016f2013 2015f 2014f
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Sweden: Sluggish demand dampens export
Slow recovery in export in 2015-2016 when the world market growthis expected to increase at a lowerrate.
Total export will grow below the trendof 5.6% (1993-2013) on average.
Loss of market shares continues unfavourable goods- and countrycomposition and increasing ULC Lower market growth in the Nordic and
EMU-countries (>55 % of Swedish export)
Surplus in foreign trade balancedeclines due to solid domestic
demand and sluggish export
performance.
-6
-4
-2
0
2
4
6
8
2011 2012 2013 2014 2015 2016
Sweden: Export, market growth and market shares
Market shares World market growth Export, %Source: Statistics Sweden
0
10
20
30
40
50
60
70
80
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sweden: Foreign trade balance, Bn, SEK
2010 2011 2012 2013 2014Source: Statistics Sweden
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Sweden: Increased investment in housing
Investment in housing is the majordriver. Factors: Low interest rates
Solid disposable income growth
Lack of housing
Risks for supply restrictions on labor and
land use for housing
Higher taxes and higher amortizing ratecould dampen demand on housing
Increasing domestic demand and a
higher growth in services will driveinvestments in the private businesssector.
Low utilization rates and lowproduction will delay investments in
manufacturing.
Fiscal policy stimulus will strengtheninvestments in housing andinfrastructure.
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1
Sweden: Investment and export
Investment,EMU Swedish export growthSource: Statistics Sweden
-15
-10
-5
0
5
10
15
20
25
2011 2012 2013 2014 2015 2016
Sweden: Investment in different sectors, %
Total Business, excl housing Housing PublicSource: Statistics Sweden
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Sweden: Household consumption
Household consumption is the maindriver in Swedish economy
Real income developments support: Rising employment and hours worked
Low inflation Redistribution via fiscal policy to consumers
with high propensity to consume
Low interest rates
Dampened growth in the years ahead:
Higher taxes
Boom in durable goods behind us?
Savings remain high Measures to limit households debt
(amortization requirements?) add to savingsthat remains high
Redistribution of financial and real savings
Uncertain political situation
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
0,0
1,0
2,0
3,0
4,0
5,0
6,0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sweden: Household income and consumption
Disposable income Household consumptionSavings ratio (RH) Interest rate costs (% of disp. inc) (RH)
Sources: Statistics Sweden and Swedbank
-20
-15
-10
-5
0
5
10
15
20
Q12006
Q42006
Q32007
Q22008
Q12009
Q42009
Q32010
Q22011
Q12012
Q42012
Q32013
Q22014
Sweden: Consumer Sector
Durable goods Non-durable goods ServicesSource: Reuters EcoWin
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Sweden: Balancing policy measures Household expectations in line with
the historical average despite strong labor market and income
developments
Tax hikes and measures toward householddebt dampen sentiment
Uncertainty is mainly seen in the view of theprivate economy (micro index)
Uncertain political situation
Are households getting nervous? Retail sales and car registrations have lost
some momentum
-50
-40
-30
-20
-10
010
20
30
40
50
-4
-2
0
2
4
6
8
10
Dec-05 Feb-07 Apr-08 Jun-09 Aug-10 Oct-11 Dec-12 Feb-14
PercentPercent
Sweden: Retail sales and car registrations, y/y
Retail Sales Car registrations (RH)
Source: Statistics Sweden
60
70
80
90
100
110
120
130
jan-05
jul-05
jan-06
jul-06
jan-07
jul-07
jan-08
jul-08
jan-09
jul-09
jan-10
jul-10
jan-11
jul-11
jan-12
jul-12
jan-13
jul-13
jan-14
jul-14
Sweden: Consumer Confidence Indicator
Consumer confidence indicator, SA Macro index Micro index
Source: Reuters EcoWin
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Sweden: Effects of amortization requirements Assumptions
Amortization of mortgage lending above LTVof 50%
Amortization rate for loans in the interval ofLTV 50% - 70% is 40 years; loans above
LTV 70% is 20 years
Household debt will increase by 4% at theend of 2015 and 2,5% at the end of 2016(5,7% presently)
Amortization requirements from 2015.
Interest rate costs in line with our interestrate forecast.
Amortization requirement intends:
Only new mortgage loans from 2015
All outstanding mortgage loans with anLTV above 50% (15% of mortgage debtoutstanding, SEK 366bn, September2014)
Gradually imposing over 2 years (SEK183bn per year)
Gradually imposing over 5 years (SEK73,2bn per year).
A mo rtizat io n in billio n SEK at: 2015 2016
A New loans 0,4 0,3
B A + existing loans 13,4 13,7
C A + outstanding loans 2yrs 6,9 7,0
D A + outstanding loans 5yrs 3,0 3,0
Source: Swedbank
Share o f dispo sable inco me, % 2015 2016
A New loans 0,0 0,0
B A + existing loans 0,7 0,7
C A + outstanding loans 2yrs 0,3 0,3
D A + outstanding loans 5yrs 0,1 0,1
Source: Swedbank
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Sweden: Effects of amortization requirements cont
Inclusion of only newly signed loans is expected to have limited effects
An immediate inclusion of mortgage debt with LTV above 50% is likely to have a severe impact Will significantly impair growth through lower consumption
Risk a severe fall in house prices
In the longer term it could affect housing negatively
Gradual introduction over 2 to 5 years likely. Affecting consumption negatively, but the effects are manageable
Uncertainty means that consumption is affected to a greater extent than savings
Reallocation of household savings from financial to real savings
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Sweden: Labor market has ongoing structural changes
Share of foreign-born participating inthe labor market continues toincrease
Positive development in 2014 for
foreigners; increased employmentand lower unemployment. However, unemployment is still high at 15.2%,
while among domestic born only 5.4%
Elderly (55-74 year) stay in the labor
market Since 2005, the number of elderly in the labor
market has increased by 120,000corresponding to a approx. 2.5 percentunemployment change
Tax and structural policy from the
new government somewhat negative.The positive effects of past mightdissipate.
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
68%
70%
72%
74%
76%
78%
80%
Participation rate (55-64) (LHS) Employment rate (65-75) (RHS)
Sources: Statistics Sweden and Swedbank
Sweden: Participation rate (55-64yrs) & employment rate (65-74yrs)
64%
65%
66%
67%
68%
69%
70%
71%
72%
73%
74%
2005Q32006Q32007Q32008Q32009Q32010Q32011Q32012Q32013Q32014Q3
Sweden: Participation rate, domestic and foreign born
Participation rate, domestic born Participation rate, foregin born
Sources: Statistics Sweden and SwedbankSource:
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Positive development. 2014 more positive than expected.
Improvement is expected to flatten
out in 2016.
Unemployment stubbornly high aslabor supply continues to increase.
Unemployment approx. 0.5 p.p.higher compared to Riksbanksforecast.
Increase in labor costs remainsmuted, albeit increasing.
Sweden: Labor market forecast
5,0
5,5
6,0
6,57,0
7,5
8,0
8,5
9,0
9,5
10,0
4 200
4 400
4 600
4 800
5 000
5 200
5 400
Sweden: Employment, labor force & unemployment
Unemployment rate (%)
Employment
Labor force
Swb
estimate
Sources: Statistics Sweden and Swedbank
2013 2014 2015 2016
Employment 1,0% 1,5% 1,3% 0,9%
labor force 1,1% 1,4% 1,0% 0,2%
Unemployement 8,0% 7,9% 7,6% 7,0%
Hours worked 0,4% 1,6% 1,3% 1,1%
Hourly wage 2,6% 3,0% 3,1% 3,4%
ULC 1,2% 1,7% 2,6% 2,2%
Source: SCB andhSwedbank
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5%
7%
9%
11%
13%
15%
1970 1980 1990 2000 2010 2020 2030 2040 2050
Sweden: Share 75+ 1970-2050
Actual
Sources: Statistics Sweden and Swedbank
Forecast 2014
Forecast 2000
Forecast 2004
Forecast 2009
Note: Forecasts from SCB
Population growth approx. 100,000this year.
Statistics: Sweden has gradually
revised forecasts upwards.
Demographic challenges havesoften.
A positive factor for domesticdemand.
Might increase potential growth.
An argument for a more
expansionary fiscal policy.
Place increased demands onintegration and labor market policy.
Sweden: Demographics look much brighter
7 500 000
8 000 000
8 500 000
9 000 000
9 500 000
10 000 000
10 500 000
11 000 000
11 500 000
12 000 000
1970 1980 1990 2000 2010 2020 2030 2040 2050
Sweden: Total population 1970-2050
Actual
Forecast 2000
Forecast 2004
Forecast 2014
Sources: Statistics Sweden and Swedbank
Forecast 2009
Note: Forecasts from SCB
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Sweden: Moderate inflation pressures going forward
Subdued inflation pressure fromimport prices. Low inflation in the Eurozone.
Gradual strengthening of the SEK (KIX-index), SEK weaker against the USD and
stronger against the EUR.
Commodity prices will rise slowly with:
Higher metal prices
Lower energy prices
Slowly rising domestic inflation.
Lower interest rates and low rental costshold back housing costs in 2014 2015. The
trend reverses in 2016.
Small increases in services costs during2014 and 2015. Price of services will,however, rise gradually due to higher wages.
Base effects contribute to higher year-on-year inflation during the fall.
Fiscal policy could have a majorimpact, mainly through hikes of
indirect tax rates.
-0,50%
0,00%
0,50%
1,00%
1,50%
2,00%
2,50%
3,00%
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Sweden: Inflation development
CPIF Swedbank Riksbank, Oct
Sources: Swedbank, Statistics Sweden and Riksbanken
-15
-10
-5
0
5
10
15
Jan-06 Dec-06 Nov-07 Oct-08 Sep-09 Aug-10 Jul-11 Jun-12 May-13 Apr-14
Sweden: Inflation development per sector
Goods ex housing Services ex housing Housing
Source: Statistics Sweden
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Sweden: Fiscal policy under political uncertainty
The governments budget bill maynot pass through the parliament. Negative budget balance during forecast
period.
Parts or the entire budget may not pass
through the Parliament by December.
Fully financed budget bill with SEK25bn in higher expenditures and
SEK 25bn in higher revenues.
35,0
40,0
45,0
50,0
55,0
-3,0
-2,0
-1,0
0,0
1,0
2,0
3,0
4,0
5,0
6,0
06 07 08 09 10 11 12 13 14 15 16
Sweden: Fiscal policy (% of GDP)
Overall balance (LS) Revenues Expenditures Debt (Maastricht)
Sources: Statistics Sweden and Swedbank
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Sweden: Budget Bill 2015 Expenditure and revenue
reforms
Reform Sum (SEK bn) Short-term effect
Labor market reforms, including infrastructure 7.8 Higher public consumption
Education 3.4 Higher public consumption
Health care, elderly care and retirees 8.3 Higher public and private consumption
Other expenditure reforms (gender equality, culture, e 6 Higher public consumption
Higher employers social contributions -11.2 Lower employment and lower private consumption
Lower earned income tax credit and higher income ta -4.3 Lower private consumption
Abolishment of tax deduction for private retirement sa -3.1 Lower private consumption
Other tax increases and expenditure reductions -6.9 Lower public and lower private consumption
Source: Ministry of Finance
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Sweden: Budget Bill 2015 Short-term effects
Redistribution from private to public consumption.
Redistribution from high to low income earners.
Neutral to marginally positive effect on Swedish growth in 2015. Redistribution from households with high income and high propensity to save to households with low income and high
propensity to consume
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Sweden: Budget Bill 2015 Long-term effects
Educational reforms increase long-term growth potential
Higher marginal taxes and higher employers social contributions may reduce employment
Time aspect: It takes a long time for educational reforms to contribute positively to growth,
while the potentially negative effects on employment from higher taxes effect potential growthimmediately
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Sweden Budget Bill 2015: Fiscal policy uncertainty &
monetary policy
Political turmoil causes uncertainty regarding the macroeconomic effects of the Budget Bill
If parts of the Budget Bill, or the full Budget Bill, do not pass through the parliament, fiscal
policy may become contractionary Expansionary fiscal policy can contribute positively to growth when monetary policy has
reached the Zero Lower Bound (see, e.g., Blanchard och Leigh 2013, Eichengreen andORourke 2012)
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Sweden: Forex and interest rate volatility expected
The krona weakens initiallyand then strengthens,especially against the euro.
The Policy rate stays low forlong until inflation firmly picksup.
-8,0
-6,0
-4,0
-2,0
0,0
2,0
4,0
6,0
8,0
10,0
12,0
FX: Exchange rate forecasts (change from Nov 4 in%)
2014 31 Dec
2015 30 Jun
2015 31 Dec
2016 30 Jun
2016 31 Dec
Sources: Reuters Ecowin and Swedbank's forecasts
95
100
105
110
115
120
125
130
135
140
-2,0
-1,0
0,0
1,0
2,0
3,0
4,0
5,0
6,0
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
FX/FI: Inflation, the repo rate and the exchange rate
CPI y/y CPIF y/y Repo rate Krona (KIX-index, RH)
Sources: Riksbanken, Statistics Sweden and Swedbank
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EURUSD has further to go but at a slower pace
EURUSD fair value suggest 1.23, butthe medium-term undervaluation gapis less now.
Relative growth, balance sheets and
interest rate differentials will continue
to support broad USD appreciationagainst the EUR.
Still, the EURUSD move has beenfast and the relative short-term macro
surprises as well as positioning could
imply some stickiness for thedownside.
Key game changers for the EUR arecredit growth and structural fiscal
policy.
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USD strength is broadening
We see a good chance for a first ratehike from Fed in H1 even if the Feddots at 3.75 % Fed Funds in 2017looks aggressive.
Fed will not be very bothered by
gradual appreciation of the dollar aslong as recovery in the Eurozone isthe main scenario, even if a strongerUSD will pressure inflation and
exports a bit.
A bigger risk is that higher rates hurtthe housing sector next year.
The USD is also supported bygeopolitical risk in Eastern Europe
and improved US terms of Trades
In historical terms the real USD TWIis still 15 % below its post-Bretton
Woods average.
Yellow line is FedFunds pricing Oct 30.Red is FOMC dots
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EURSEK to stay range bound
No case for a sustainable break-out of the9.00-9.50 range in the near term.
Rate spread is zero. Still SEK is preferredover EUR over time based onfundamentals and valuation.
The Riksbank will not tolerate EURSEKbelow 8.80 at this stage. Currencyinterventions are can not be excluded.
SEK is a high-beta play on the outlook forthe Eurozone and if the ECB is successfulor not.
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EURUSD has more downside but aslower pace we target 1.22 in 6mo.
USD is still cheap based on
fundamentals.
We have squared our long USDSEK,entered at 6.50, target 7.25 reached.
EURSEK is a high-beta trade on theEuro-growth outlook.
Lower EURSEK over time as
fundamentals still speak in favour SEK.EURSEK below 8.80 would result ininterventions from the Riksbank.
We look for USD strength againstcommodity currencies like AUD, NZD
and NOK. Terms of Trade will weaken commodity
currencies. Gradually slower Chinese growth(less capex), and supply keep pressuring the oil
price.
We target AUDUSD to 0.82 in 6mo.
Summary on FX
2014 11 04 1 month 3 month 6 month 12 month
USD/SEK 7,4082 7,46 7,44 7,54 7,54
EUR/SEK 9,2633 9,40 9,30 9,20 9,05
GBP/SEK 11,8440 11,90 11,92 11,95 11,91
NOK/SEK 1,0887 1,12 1,10 1,08 1,05
CHF/SEK 7,6849 7,77 7,62 7,54 7,36
CAD/SEK 6,5110 6,66 6,64 6,67 6,56
AUD/SEK 6,4622 6,49 6,47 6,41 6,18
NZD/SEK 5,74 5,82 5,65 5,66 5,43
JPY/SEK 6,5225 6,49 6,47 6,45 6,28
CNY/SEK 1,2115 1,21 1,22 1,25 1,26
RUB/SEK 0,1700 0,180 0,177 0,173 0,166LTL/SEK 2,6828 2,72 2,69 2,66 2,62
DKK/SEK 1,2445 1,26 1,25 1,24 1,22
PLN/SEK 2,1895 2,21 2,16 2,16 2,15
EUR/NOK 8,5089 8,40 8,45 8,50 8,60
USD/NOK 6,8046 6,67 6,76 6,97 7,17
EUR/USD 1,2504 1,26 1,25 1,22 1,20
EUR/GBP 0,782 0,790 0,780 0,770 0,760
EUR/CHF 1,2054 1,21 1,22 1,22 1,23EUR/JPY 142,03 145 144 143 144
EUR/PLN 4,22 4,25 4,30 4,25 4,20
EUR/RUB 54,50 52,29 52,50 53,07 54,60
USD/JPY 113,58 115,00 115,00 117,00 120,00
USD/CAD 1,1378 1,12 1,12 1,13 1,15
AUD/USD 0,87 0,87 0,87 0,85 0,82
NZDUSD 0,77 0,78 0,76 0,75 0,72
GBP/USD 1,5986 1,59 1,60 1,58 1,58
Swedbanks FX forecasts
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Global view
07/11/2014
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EMU: Recovery paused, but probably still underway
Disappointing lack of growth, weakerthan business surveys suggested. Germany and Spain in the lead
France and Italy struggle to take off
Arguments for continued upswing: Retail sales have been growing at 2% rate.
Unemployment is falling almost everywhere.
ECB has launched forceful stimulus measures
(zero rates, TLTROs and asset purchases).
Euro has weakened.
Most banks passed the stress test/AQR. Private sector consolidation is well ahead.
Stronger growth in the US.
Less fiscal tightening ahead, a budget
compromise seems to have been reachedbetween EU and France/Italy.
Wage and price inflation will remain low, butdeflationary spiral not likely
We revise down growth projections onweak short-term data, but stick to our
overall view on a cyclical upswing.
-5
-3
-1
1
3
5
7
37,5
42,5
47,5
52,5
57,5
62,5
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
EMU - PMI vs. GDP
Composite PMI GDP
Source: Reuters EcowinSource:
30
35
40
45
50
55
60
65
2007 2008 2009 2010 2011 2012 2013 2014
EMU: Composite PMI
Germany Spain France Italy
Source: Reuters Ecowin
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Eurozone vs Japan in the 1990s
Similarities Shrinking and ageing labor force.
Declining volumes of bank lending, modestgrowth of money supply
Differences Private debt level much bigger in Japan in
the 1990s, so deleveraging in thedeflationary environment much more painful.
Eurozone banks balance sheets have beenless damaged by asset price declines thantheir Japanese counterparts in the 90s.
JP over-invested during the bubble period,the EZ as a whole has not seen a similarsurge in the inv/GDP ratio .
Deflationary pressures in the EZ in 2014largely due to external factors (stronger
euro, cheaper energy) as for JP it was thecollapse of the money markets and thebanking sector.
Still, appropriate policy needed toavoid stagnation in the EZ
0
10
20
30
40
50
60
Dec-02 Apr-04 Aug-05 Dec-06 Apr-08 Aug-09 Dec-10 Apr-12 Aug-13
% of GDP
EMU: Major central bank balance sheets
ECB BoE BoJ Fed
Source: Reuters Ecowin
-1
0
1
2
3
4
5
-20
-10
0
10
20
30
40
1997 2000 2003 2006 2009 2012
EMU: Inflation and inflation expectations
Infl.expectations, next 12 months (LS)HICP, excl energy and unprocessed food, YoY (RS)HICP, YoY (RS)
Sources: Eurostat and DG ECFIN
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US: Strong upswing in growth, but there are limits
The US economy is firing up. The recovery in the second and third quarters
has been surprisingly strong.
Growth is broad-based, with private sector takingthe lead and the fiscal policy getting out of theway.
Competitiveness is improving due to low wageincreases, cheap energy and still moderatelypriced dollar.
Lack of reforms and public investmentslimit growth potential
Inefficient tax system, crumbling infrastructureand underinvestment in public education are thekey US challenges.
Decline in labor force participation not likely to
fully recover.
Growth forecast at 3% in 2015 before decliningtoward 2% in 2016.
20
25
30
35
40
45
50
55
60
65
70
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
USA: ISM Purchasing Managers' Index - Manufacturing
PMI-Total PMI-Employment PMI-NewOrders
Source: ISM
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
-0,4
-0,2
0,0
0,2
0,4
0,6
0,8
1,0
1,2
Q1-10 Q4-10 Q3-11 Q2-12 Q1-13 Q4-13 Q3-14 Q2-15 Q1-16 Q4-16
USA: Real GDP growth (in %)
USA (q/q) US (y/y, RS)
Sources: Reuters Ecowin and Swedbank's forecast
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US: Monetary policy normalisation underway
The end of unconventional monetarypolicy instruments Solid economic growth and labor market
improvement supported an end to quantitativeeasing in October
However, price pressures remain limited, and
wage growth muted.
We expect the first hike of feds fundsrate in mid-2015. Concerns of prematurely tightening policies is
weighted against the risk of asset bubbles
building up. Due to possible negative feedback from the rest
of the world, the hiking pace is expected to bemoderate, with the feds funds rate at 1.75% atend-2016.
54
56
58
60
62
64
66
-6
-4
-2
0
2
4
6
8
10
12
2000 2002 2004 2006 2008 2010 2012 2014
US: Labor market data
Participation rate (RS) Unemployment rate (%, sa) Empl growth (%, y/y)
Source: Reuters Ecowin
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
US: Core inflation and wages (%)
PCE core CPI core Average hourly earnings
Source: Reuters Ecowin
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UK: Stable growth despite the fragile Eurozone
The recovery is expected to continue. GDP-growth more balanced than prior
statistics have indicated, Office for NationalStatistics has revised investments upward.
Sentiment indicators have dampened lately,but stable growth is foreseen.
Housing market gets some relief. Weak global growth, in the Eurozone among
others, may lower exports in the mediumrun.
Members of BoEs MPC at different
views CPI inflation has fallen but is expected to
increase over time.
The first bank rate hike to 0.75% is postponedto Q2 2015 from Q1 in the August forecast.
Sterling appreciation w.r.t. the euro goingforward
Risks: uncertainty relating to generalelection in the spring 2015 anddownside risks to foreign trade.
0
1
2
3
4
5
6
0
1
2
3
4
5
6
Jan-02 May-03 Sep-04 Jan-06 May-07 Sep-08 Jan-10 May-11 Sep-12 Jan-14
UK: Inflation and wage growth
Average weekly earnings, whole economy, regular pay, y/y, MA3mCore CPI, y/y, MA3mCPI, y/y, MA3m
Source: Reuters Ecowin
0,00
0,50
1,00
1,50
2,00
2,50
Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15 Feb-16 Sep-16
UK: Rate path
Official Bank Rate Short Sterling Swedbank
Sources: Swedbank, Bank of England and Bloomberg
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Japan: Weaker than anticipated
Half-way of achieving the objectiveof 2% inflation and growth.
But increasing signs of weakness inthe economy following the sales-taxhike in April.
Growth around 1% going forward onstronger investments and exportspicking up slowly.
Next VAT increase still likely tohappen at the end of 2015, but willbe decided in early Dec.
As interest rate differentials betweenthe US and Japan widen, the USD
will continue its outperformanceagainst the yen.
-10
-8
-6-4
-2
0
2
4
6
8
10
-50
-40
-30-20
-10
0
10
20
30
40
50
2008 2010 2012 2014
Japan: Main economic indicators, y/y, %
GDP (RS) Exports of goods and services (LS)
Industrial production (LS) Retail sales (RS)
Source: Reuters EcoWin
-30
-20
-10
0
10
20
30
40
50
60
-3
-2
-1
0
1
2
3
4
5
6
2009 2010 2011 2012 2013 2014
Japan: Prices, y/y, %
CPI less fresh food (LS) REER, JPY (RS)
Monetary base, sa, JPY (RS)
Sources: Reuters EcoWin and Swedbank
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China growth has lost momentumbut is kept up by selective stimulus.
Growth will get a boost by lower oil
prices and slower inflation in India.
Brazil is weak on all fronts and inhuge need of structural reforms.
Russia slips into recession, butreserves help.
Emerging markets: Growth loses momentum
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The Brazilian economy is instagflation.
GDP growth is negative and inflation
is high and increasing.
Economic growth is weak on allfronts: Weaker demand from China.
Industrial production has been negative in2014 and PMI is below 50.
Retail sales is negative, credit growth is
weak and consumer confidence the lowestsince 2009.
The current account deficit is still
high, making the economyvulnerable for a setback in risk
sentiment. The need for structural reforms is
huge and the political challenges areimmense.
Brazil: Negative on all fronts
-2
0
2
4
6
8
10
12
14
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Percen
t
Brazil: Retail sales, constant prices, % yoy
Sources: Reuters EcoWin and Swedbank Note: 3m moving average
-4
-2
0
2
4
6
8
10
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Percent
Brazil: Real GDP, % yoy
Sources: Reuters EcoWin and Swedbank
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Growth indicators are sluggish butwe expect stronger sentiment on theback of new political reforms.
However, we dont expect any quick
fixes. Lower oil prices will boost demand
and help to narrow the currentaccount deficit.
Sharp fall in inflation.
A clear shift in monetary policy since lastyear with a new central bank governor.
Lower food prices after sharp rain fall.
Lower oil prices will help reaching the newinflation target (8% Jan 2015, 6% Jan 2016).
India: The hard work has started
6
6,5
7
7,5
8
8,5
9
9,5
10
10,5
11
11,5
2012 2013 2014
Percen
t
India: Consumer prices, urban and rural
Sources: Reuters EcoWin and Swedbank
2
4
6
8
10
12
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Percent
India: Real GDP, % yoy
Sources: Reuters EcoWin and Swedbank
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Growth has lost momentum but iskept up by selective stimulus.
Headline GDP is out of line with
other statistics.
Net exports is the only driver in anotherwise weak economy.
House prices are falling on a broadbasis.
Many activity indicators are weak
and commodity prices are falling.
Low inflation makes it easier for thegovernment to stimulate economy.
We believe the adjustment to
structurally lower growth will beslower than our earlier forecasts.
China: Policy slows downward trends
2500
3000
3500
4000
4500
5000
5500
7
9
11
13
15
17
19
Nov-09May-10 Nov-10May-11 Nov-11May-12Nov-12May-13Nov-13May-14
Percent
Industrial production (LHS) Steel prices (RHS) (CNY/Metric ton)
Sources: Reuters EcoWin and Swedbank
China: Industrial production (% yoy) and steel prices
10
15
20
25
30
35
40
45
50
55
60
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Perce
nt
Sources: Reuters EconWin and Swebank
China: Investment in Fixed Assets, Current prices, % yoy
R i T li i i b h l
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Russia: To slip into recession, but reserves help
Shallow recession, with very faint growthreturning towards the end of 2015 GDP up 0.2% in 2014 (as falling imports
briefly fill in for collapsing investments andretreating consumption), but to fall 0.6% in2015, only faint 1% recovery in 2016.
RUB weakness cushions lower oil prices forthe budget and supports non-oil exports; yet,negative feedback loops via higher inflationand less consumer spending.
Import substitution to create some jobs, butlabor market to continue cooling. Real wage
growth already negative. Reserve levels unable to balance the lack of
foreign financing; banking/ investmentsqueeze to stun medium term growth
Aim to stick with current economic policy. Recovery hinges upon stabilisation of the
RUS/UKR conflict by mid 2015, followed byless sanctions and some return of westerninvestors. Fiscal rule and inflation targetingoutlook is retained. RUB to weaken but lessfast amid temporary gains.
In negative scenarios everything goes.
Very disappointing long term outlook To boost growth, oil prices must rise sharply
and/ or corruption wane... neither is likely.
-12
-8
-4
0
4
8
12
-60
-40
-20
0
20
40
60
2007 2008 2009 2010 2011 2012 2013 2014
Russia: Annual growth of GDP components, %
GDP (RS) Investments Households Exports Imports
Source: Reuters Ecowin
-100
-80
-60
-40
-20
0
20
40
60
80-80
-60
-40
-20
0
20
40
60
80
100
2009 2010 2011 2012 2013 2014
Russia: Annual growth of rouble & oil price, %
Brent Oil, USD USD/RUB (RS, reversed)Source: Reuters Ecowin
Oil L i h i i i l b l h
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Oil: Lower price has positive impact on global growth
A fall in oil price by 20% increasesglobal consumption by 0.2% in 2015and by 0.2-0.4% 2016.
Biggest winners are emerging
markets, countries with net import ofoil.
Lower bill for oil import willstrengthen external balanceparticularly in countries with high oil
intensive demand. Strengthening of public finance when
the subvention rate decline mainly inthe emerging markets.
0 1 2 3 4 5 6 7 8
USA
China
Japan
India
South Korea
Source: IEA
Commodities: Biggest net importers of oil, million barrels per day
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Nordic area: Facing headwinds of various varieties
Norway: The end of the investmentcycle in both energy extraction andhousing construction is aggravatedby a falling oil price. We revise downgrowth forecasts by 0.5 ppt in both
2015 and 2016 to 1.5% and 1.8%respectively.
Denmark: Recovery threatened byEurozone weakness and domestic
imbalances. Gradual recovery withgrowth at 1.7% in 2015 and 2.2% in2016.
Finland: The Finnish economy isstruggling with structural adjustment
while being relatively hard hit by theslowing Russian economy andsanctions. A 3-year long recession is
expect to end in 2015 with realgrowth at 0.4% and 1.3% in 2016.
N Sl d ti f b th il & h h ld
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Norway: Slowdown continues for both oil & households Modest economic growth continues:
High Q2 growth in Mainland economy set to bereversed in Q3.
Norges Banks Regional network confirmsmodest growth and outlook.
Weak retail sales in Q3 in contrast to renewedhouse price growth.
Oil investments projected to fall, loweroil prices likely to exacerbate downturn.
Norges Bank will have to reconsiderthe 1.5% policy rate next year. Bank projected unchanged rate in September,
no bias towards cut. FRAs now imply high probability of cut.
Bank is reluctant to cut for fear of fuelling houseprice growth and debt build up, but willeventually have to reconsider.
We reduce our growth projections to
1.5% in 2015, risk still on downside. FRAs and NOK have fallen sufficiently
vs. fundamentals.
-3
-2
-1
0
1
2
3
4
5
6
-1,5
-0,5
0,5
1,5
2,5
3,5
2008 2009 2010 2011 2012 2013 2014 2015
Norway: Actual vs. reported growth q/q
GDP Mainland ex. electr. q/q (RH) Norges Bank forecast (RH)
Regional Network reported/exp growth
Sources: Reuters Ecowin and Swedbank
-4%
-2%
0%
2%
4%
6%
8%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Norway: Contributions to GDP
Private cons Public exp
Oil invest Mainland business inv
Housing InventoriesNet export. ex oil, ships, plat. GDP MainlandSource: Statistics Norway
Fi l d O l d t th t ti l
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Finland: Only modest growth potential
Industrial output has failed to recover inrecent months. Energy and construction sector had the most
negative impact.
labor productivity growth has picked up recentlybut has lagged behind its main trading partners.
Services sector turnover has increased
in 2014. Contributed mainly by IT, financial and real
estate sector. At the same time, public sector services have not
picked up.
Investments still decreasing. Especially private investments.
Government contribution will stay weak due tothe need for budget consolidation.
Government is consolidating itsfinances. Budget deficit will be reduced with the price of
increasing debt.
Unemployment rate has increased andnominal growth of wages decelerated. Industrial sector wages still decreasing.
Sluggish improvement of householddisposable income inhibits consumption Households disposable income has increased
less than its loan debt, increasing their
indebtedness ratio close to 120%.
-10
-5
0
5
10
15
2011 2012 2013 2014
Finland: Industrial output & services' turnover, y/y, %
Industrial output Services' turnover
Source: Statistics Finland
3
2.6
-1.5-1.2 -0.2
0.4
1.3
-2
-1
0
1
2
3
2010 2011 2012 2013 2014f 2015f 2016f
Finland: Will exit its 3-year recession in 2015, GDP %
Sources: Statistics Finland and Swedbank
Denmark: External weakness & domestic imbalance threaten
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1,3
-1,3
0,5
-0,3 -0,3 -0,5 -0,2
0,1
-0,3
0,80
0,1 0,2
-3
-2
-1
0
1
2
3Denmark: Contribution to growth (s.a. qoq in %)
Inventories InvestmentPublic consumption Household consumptionNetexports GDP
Source: Denmark Statistics
35000
40000
45000
50000
55000
60000
94
96
98
100
102
104
106
Jan-05 Feb-06 Mar-07 Apr-08 May-09 Jun-10 Jul-11 Aug-12 Sep-13
Denmark: Competitiveness and exports
REER (ULC) Export (m Dkk, RS)
Sources:BIS and Statistics Denmark.
Denmark: External weakness & domestic imbalance threaten
growth Positive but weak growth in the last 4
quarters Household sentiments is strengthening
However, deflation is expected, and
the National Bank has intervened in the
currency market to weaken the krone.
German demand and house priceswill determine recovery We revise down our growth forecast this
year due to revision of data.
Looking forward we expect a continued, butgradual recovery, with real growth rates ofabout 2% in 2015 and 2016.
Growth in real income and employment willsupport domestic demand, but
household indebtedness could endangerboth consumption and financial sector
stability.
Ultimately external demand, primarily fromthe Eurozone, will determine the speed ofrecovery.
Th B l i
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The Baltics
Estonia: Economic growth pickingup.
Latvia: Shifting down a gear.
Lithuania: Steady growth, lowinflation.
Estonia: Economic growth picking up
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Estonia: Economic growth picking up GDP growth revised up for 2014 due to
data revisions.
Growth will accelerate in 2015-2016 asexternal demand will pick up.
Investment growth will remain modest.
Growth of corporations loan portfolio hasaccelerated in 2014.
Public investments will fall in 2015-2016.
Inflation will accelerate in 2015-2016. Supported mostly by higher prices of food,
weaker euro, and an increase in excise tax
rates.
Wage growth will remain fast asworking-age population and the numberof unemployed will decrease further.
Consumers will also benefit from thesubstantial reduction in labor taxes in2015.
10.0%
8.6%
7.5% 7.2% 7.1%
-2%
0%
2%
4%
6%
8%
10%
12%
2012 2013 2014f 2015f 2016f
Estonia: Labour market indicators and inflation
Unemployment rate CPI growth, YoY Net wage real growth, YoY
Sources: Statistics Estonia, Swedbank
8.3
4.7
1.6 2.0 2.5 3.0
-4
-2
0
2
4
6
8
10
2011 2012 2013 2014f 2015f 2016f
Estonia: Contribution to GDP growth
Households Government InvestmentsNet exports Inventories GDP growth, % (Aug.)GDP growth, % (Nov.)
Sources: Statistics Estonia and Swedbank
Latvia: Shifting to a lower gear
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Latvia: Shifting to a lower gear
Moderate growth in 2014-16. Historical data revisions imply a bit slower
growth in 2014 (on the side of privateconsumption and inventories), but the storyremain the same.
Exports to Russia continue to falling, butcompensated by decent export growth toother markets. Weaker-than-expectedgrowth in the Eurozone will be outweighedby (i) relatively strong growth in some otherEU countries and (ii) resuming steelproduction of Liepajas Metalurgs (newowner).
Growth to become more balanced graduallywith exports and investments picking up in2015-2016
Stagnating employment, but strongreal wage growth. Very little job creation, but the
unemployment rate to continue falling due toemigration and demographics.
Strong wage growth to slow down in 2015,but exceeding productivity thus posing risksto competitiveness going forward.
Inflation to pick up in 2015 due to electricitytariff hikes, but it will be lower thananticipated before due to fallen oil and foodprices.
No major change in economic policyafter parliamentary elections.
-20
-10
0
10
20
30
40
2011 2012 2013 2014
Latvia: GDP annual growth, %
GDP
Householdconsumption
Gross fixed capitalformation
Exports
Imports
Source: CSBL
-24
-16
-8
0
8
16
24
2005 2007 2009 2011 2013
Latvia: Labour market indicators, %
Unemploymentrate
Employment, y/y
Real net wage,YoY
Source: CSBL
Lithuania: Steady growth after deceleration in 2014
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Lithuania: Steady growth after deceleration in 2014
A slight downward revision of growthforecast for 2015; growth accelerationstill expected in 2016. Household consumption will be the main
driver of growth. It will be supported by animproving situation in the labor market, lowinflation and accelerating growth of credit
portfolio. Growth of investments will decelerate in
2015 due to weaker business confidenceand worsened opportunities for exports, butwill pick up in 2016 on the back of EUstructural funds and the economic situationin foreign markets is likely to improve.
Exports will be negatively affected by tradebans to Russia and continued weakness in
euro zone. Inflation next year will be lower than
previously expected, but will pick up in2016. Declining energy prices and contained labor
cost growth will keep inflation low this andnext year.
Higher inflation towards the end of 2015 andin 2016 due to faster increase of labor costs,more expensive food products and cheapereuro.
Wage growth will accelerate in 2016 Real net wage growth will be supported by
low inflation, an increase in non-taxableincome threshold and the minimum monthlywage; upcoming parliamentary election in
2016 will probably also encourage thegovernment to start increasing public sectorwages.
-2
0
2
4
6
2010 2011 2012 2013 2014
Lithuania: Prices of goods & services, y/y, (HICP), %
Annual inflation Prices of goods Prices of services
Source: Eurostat
1.6
6.1
3.83.3 3.0 3.3
3.8
-4
-2
0
2
4
6
8
2010 2011 2012 2013 2014f 2015f 2016f
Lithuania: Contributions to GDP growth, p.p.
Household consumption Government consumption
Investment (excl.invent.) Inventories
Net export GDP growth, %
Source: Statistics Lithuania and Swedbank's forecasts
A di K i i di t &
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Appendix: Key economic indicators &
national accounts for Swedbankshome markets
Sweden: Key economic indicators
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Sweden: Key economic indicators
Key Economic indicators, 2013-20161/
2012 2013 2014f 2015f 2016f
Real GDP (calendar adjusted) 0,1 1,5 2,2 2,4 2,7
Industrial production -3,0 -1,3 0,3 3,6 4,5
CPI index, average 0,9 0,0 -0,2 0,7 2,0
CPI, end of period -0,1 0,1 -0,4 1,5 2,5
CPIF, average2/ 1,0 0,9 0,4 1,0 1,6
CPIF, end of period 1,0 0,8 0,3 1,4 1,8Labour force (15-74) 0,9 1,1 1,4 1,0 0,2
Unemployment rate (15-74), % of labor force 8,0 8,0 8,0 7,7 7,0
Employment (15-74) 0,7 1,0 1,5 1,3 0,9
Nominal hourly w age w hole economy, average 3,0 2,6 3,0 3,1 3,4
Savings ratio (households), % 12,4 12,4 12,1 12,2 12,2
Real disposable income (households) 4,2 2,5 2,4 2,9 2,0
Current account balance, % of GDP 5,7 5,2 4,3 3,8 3,1
General government budget balance, % of GDP 3/ -1,3 -1,2 -2,3 -1,6 -1,0
General government debt, % of GDP 4/ 36,9 39,5 40,5 40,6 40,0
1/ Annual percentage growth, unless otherwise indicated. 2/ CPI with f ixed interest rates.
3/ As measured by general government net lending. 4/ According to t he Maas tricht c rit erion.
Sources: Statistics Sweden and Swedbank
Swedbank's GDP Forecast - Sweden
Changes in volume, %
Households' consumption expenditure 2,1 2,8 (2,8) 2,5 (2,4) 2,1 (2,1)
Government consumption expenditure 1,6 1,0 (0,9) 2,1 (2,0) 1,9 (1,6)
Gross f ixed capital formation -0,1 4,3 (3,9) 5,6 (6,0) 5,8 (6,0)
private, excl. housing -1,1 -0,7 (-1,8) 3,8 (4,9) 6,4 (6,4)
public 0,2 5,7 (5,7) 5,1 (3,8) 3,4 (3,8)
housing 3,8 22,5 (22,3) 12,1 (10,6) 6,4 (6,4)
Change in inventor ies1/ 0,0 0,2 (0,2) 0,0 (0,1) 0,0 (-0,0)
Exports, goods and services -0,5 2,2 (2,3) 3,8 (4,4) 5,6 (5,9)
Imports, goods and services -0,8 4,1 (4,1) 5,1 (5,7) 5,8 (6,2)
GDP 1,5 2,1 (1,9) 2,6 (2,6) 2,9 (2,7)
GDP, calendar adjusted 1,5 2,2 (2,1) 2,4 (2,3) 2,7 (2,5)
Domestic demand 1/ 1,3 2,5 (2,3) 3,0 (2,8) 2,8 (2,6)
Net exports 1/ 0,1 -0,6 (-0,6) -0,4 (-0,3) 0,1 (0,1)
1/ Co ntribution to GDP growth. So urces: Statistics Sweden and Swedbank
2016f2013 2015f 2014f
Interest and exchange rate assumptions
Outcome Forecast
2014 2014 2015 2015 2016 2016
05-nov 31 Dec 30 Jun 31 Dec 30 Jun 31 DecInterest r ates (%)
Policy rate 0.25 0.00 0.00 0.00 0.00 0.50
10-yr. gvt bond 1.22 1.40 1.90 2.05 2.20 2.30
Exchange rates
EUR/SEK 9.2 9.3 9.1 9.1 9.0 8.9
USD/SEK 7.4 7.4 7.5 7.5 7.6 7.3
KIX (SEK) 1/ 109.8 110.7 109.0 108.6 108.2 106.7
1/ To tal co mpetit iveness weights. Trade-weighted exchange rate index fo r SEK.
Sources: Reuters Eco win and Swedbank
Estonia: Key economic indicators
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Estonia: Key economic indicators
ESTONIA: Key economic indicators, 2013-20161/
2013
Real GDP grow th, % 1.6 2.0 (0.8) 2.5 (2.3) 3.0 (3.0)
Household consumption 3.8 3.6 (3.5) 3.8 (3.5) 3.4 (3.8)
Government consumption 2.8 0.5 (1.2) 1.0 (1.2) 1.0 (1.4)
Gross fixed capital formation 2.5 2.5 (0.0) 3.0 (4.0) 4.5 (5.5)Exports of goods and services 2.6 1.5 (1.0) 2.0 (2.5) 4.0 (4.0)
Imports of goods and services 3.1 1.0 (2.0) 2.5 (3.7) 5.0 (5.3)
Consumer price grow th, % 2.8 0.0 (0.3) 1.3 (2.5) 2.0 (2.7)
Unemployment rate, % 2/ 8.6 7.5 (7.7) 7.2 (7.6) 7.1 (7.2)
Real net monthly w age grow th, % 7.5 5.2 (5.9) 7.4 (7.5) 6.5 (6.3)
Nominal GDP, billion euro 18.7 19.5 (19.1) 20.6 (20.2) 21.9 (21.5)
Exports of goods and services (nominal), % grow th 3.6 1.8 (1.8) 2.5 (3.6) 5.1 (5.5)
Imports of goods and services (nominal), % grow t 2.7 0.0 (1.7) 2.5 (4.7) 5.6 (6.8)
Balance of goods and services, % of GDP 1.2 2.5 (1.8) 2.7 (1.7) 3.0 (1.5)
Current account balance, % of GDP -1.4 -0.6 (-1.3) -0.6 (-1.7) -0.5 (-2.0)
Current and capital account balance, % of GDP 0.0 -0.2 (1.6) 1.8 (1.3) 2.0 (1.2)
FDI inf low , % of GDP 3.6 4.1 (2.1) 3.9 (2.5) 3.7 (2.3)
Gross external debt, % of GDP 93.6 90.4 (85.5) 86.1 (82.5) 81.6 (79.6)General government budget balance, % of GDP 3/ -0.5 -0.5 (-0.5) -0.4 (-0.4) -0.2 (-0.2)
General government debt, % of GDP 10.1 10.0 (10.0) 9.8 (9.8) 9.5 (9.5)
1/ August 2014 forecast in parenthesis
2/ According to Labour force survey
3/ According to Maastricht criterion
2014f 2015f 2016f
Sources: Statistics Estonia, Bank of Estonia, Sw edbank
Latvia: Key economic indicators
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Swedbank
Latvia: Key economic indicators
LATVIA: Key economic indicators, 2013-2016
1/
2013
Real GDP grow th, % 4.2 2.3 (2.5) 2.6 (2.6) 3.5 (3.5)
Household consumption 6.2 3.3 (3.7) 3.5 (3.3) 4.0 (4.0)
Government consumption -4.2 2.6 (1.0) 1.6 (1.6) 1.0 (0.8)
Gross f ixed capital formation -5.2 2.5 (2.0) 2.0 (2.0) 7.0 (7.0)
Exports of goods and services 1.5 0.9 (0.5) 3.0 (3.0) 4.5 (4.5)
Imports of goods and services 0.3 1.0 (2.3) 3.3 (3.3) 6.0 (5.7)
Consumer price grow th, % 0.0 0.8 (0.8) 2.1 (2.5) 2.5 (2.5)
Unemployment rate, % 2/ 11.9 10.7 (10.7) 9.9 (9.9) 8.8 (8.8)
Real net monthly w age grow th, % 5.7 7.4 (7.4) 3.3 (2.9) 3.9 (3.9)
Nominal GDP, billion euro 23.2 24.5 (24.3) 26.0 (25.7) 27.7 (27.5)
Exports of goods and services (nominal), % grow th 2.2 0.5 (1.0) 4.9 (5.4) 6.6 (7.1)
Imports of goods and services (nominal), % grow th 0.9 0.0 (2.7) 4.8 (5.7) 8.1 (8.3)
Balance of goods and services, % of GDP -3.3 -2.9 (-2.8) -2.8 (-2.9) -3.7 (-3.6)
Current account balance, % of GDP -2.3 -2.1 (-2.0) -2.1 (-2.2) -2.9 (-2.9)
Current and capital account balance, % of GDP 0.1 0.5 (0.6) 1.0 (0.9) -1.8 (-1.8)
FDI inflow , % of GDP 2.9 1.2 (1.6) 2.3 (2.3) 2.9 (2.9)
Gross external debt, % of GDP 131.3 130.4 (130.3) 124.2 (124.6) 119.8 (119.8)General government budget balance, % of GDP 3/ -0.9 -1.0 (-1.3) -1.5 (-1.5) -0.8 (-0.8)
General government debt, % of GDP 38.2 39.3 (39.1) 34.1 (34.3) 33.5 (33.7)
Sources: CSBL and Swedbank.
1/August 2014 f orecast in parenthesis, 2013 f igures are updated according to new ESA2010 methodology.2/According to Labour f orce survey.3/According to Maastricht criterion.
2014f 2015f 2016f
Lithuania: Key economic indicators
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Swedbank
Lithuania: Key economic indicators
LITHUANIA: Key economic indicators, 2013-2016 1/
2013
Real GDP grow th, % 3.3 3.0 (3.0) 3.3 (3.5) 3.8 (3.8)
Household consumption 4.2 5.0 (4.3) 4.5 (4.3) 4.7 (4.7)
Government consumption 1.8 2.0 (2.0) 2.5 (2.5) 3.0 (2.7)
Gross f ixed capital formation 7.0 6.5 (6.5) 6.0 (7.0) 10.0 (10.0)Exports of goods and services 9.4 -1.0 (-1.5) 3.5 (3.5) 5.0 (5.0)
Imports of goods and services 9.0 2.0 (1.6) 5.2 (5.2) 7.2 (7.1)
Consumer price grow th, % 1.0 0.2 (0.2) 1.5 (2.0) 2.0 (3.0)
Unemployment rate, % 2/ 11.8 10.9 (10.9) 9.7 (9.7) 8.5 (8.5)
Real net monthly w age grow th, % 3.8 4.7 (4.7) 3.8 (3.5) 5.1 (4.1)
Nominal GDP, billion euro 35.0 36.0 (35.7) 37.8 (37.6) 39.9 (40.0)
Exports of goods and services (nominal), % grow th 8.0 -2.5 (-4.0) 4.5 (4.5) 7.0 (8.0)
Imports of goods and services (nominal), % grow th 7.5 1.0 (0.0) 5.5 (5.5) 8.0 (9.0)
Balance of goods and services, % of GDP 1.3 -1.6 (-2.3) -2.4 (-3.1) -3.2 (-3.9)
Current account balance, % of GDP 1.6 -0.7 (-1.8) -1.5 (-2.0) -2.1 (-2.4)
Current and capital account balance, % of GDP 4.6 1.6 (0.5) 0.8 (0.3) 0.2 (-0.1)
FDI inf low , % of GDP 1.5 2.5 (2.5) 3.0 (3.0) 4.0 (4.0)
Gross external debt, % of GDP 69.7 66.5 (67.1) 65.0 (65.3) 62.7 (62.6)
General government budget balance, % of GDP 3/ -2.6 -1.3 (-2.1) -1.3 (-1.2) -1.0 (-0.5)
General government debt, % of GDP 39.0 41.6 (42.7) 42.4 (42.5) 38.1 (37.5)
1/ August 2014 f orecast in parenthesis
2/ According to Labour f orce survey
3/ According to Maastricht criterion; Nov ember f orecasts
according to ESA'2010, f orecasts in parenthesis according to
ESA'95
2014f 2015f 2016f
Sources: Statistics Lithuania,
Bank of Lithuania and Swedbank.
Contact information
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Swedbank
Contact informationMacro Research Strategy
Olof Manner Magnus Alvesson Helene Stangeb ye Olsen Anders Ekl f ol of.manner@swedb ank.se magnus.al vesson@swedb ank.se hso@swedb ank.no anders.ekl of@swedb ank.se
Head of Macro Head of Economic Forecasting Reserach Assistant Chief FX Strategist
+46 (0)70 567 9312 +46 (0)8 5859 33 41 +47 23 23 82 47 +46 (0)8 700 91 38
Anna Fellnder Knut Hallberg Liis Elmik Jerk Matero
[email protected] [email protected] [email protected] [email protected]
Group Chief Economist Senior Economist Senior Economist Chief IR Strategist
+46 (0)8 5859 39 34 +46 (0)8 700 93 17 +372 888 72 06 +46 (0)8 700 99 76
Harald-Magnus Andreassen Jrgen Kennemar Teele Aksalu Hans Gustafson
[email protected] [email protected] [email protected] [email protected]
Chief Economist Norway Senior Economist Economist Chief EM Economist & Strategist
+47 23 11 82 60 +46 (0)8 700 98 04 +372 888 79 25 +46 (0)8 700 91 47
Tnu Mertsina ke Gustafsson Andrejs Semjonovs
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Chief Economist Estonia Senior Economist Economist
+372 888 75 89 +46 (0)8 700 91 45 +371 6744 58 44
Nerijus Maiulis Anna Breman Lija Strauna
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Chief Economist Lithuania Senior Economist Senior Economist
+370 5258 22 37 +46 (0)8 700 91 42 +371 6744 58 75
Mrti Kazks Cathrine Danin Laura Galdik ien
[email protected] [email protected] [email protected]
Deputy Group Chief Economist, Chief Economist Latvia Economist Senior Economist
+371 6744 58 59 +46 (0)8 5859 34 92 +370 5258 22 75
MadeleinePulk ystein Brsum Vaiva ekut
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Head of Strategy and Allocation Senior Economist Senior Economist
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