The Swedish Economy August 2012

15Macroeconomic Development andEconomic Policy 2012–2016The recession is deepening this year, and the Swedish economywill not begin to recover until the second quarter of 2013. Economicpolicy will need to remain expansionary in order to stimulatedomestic demand as exports stagnate because of the lacklustretendency of demand and a stronger krona. Fiscal policywill be slightly expansionary this year and next year, but contractionaryin 2014–2016 so that net lending will reach1.5 percent of GDP when resource utilization in the economy isbalanced is achieved in 2016. The repo rate will be lowered to1 percent this year and will need to be kept low for several yearsahead.This chapter first presents the NIER’s forecast for the developmentof the international and Swedish economy during 2012–2016. There is then a more detailed description of the developmentof monetary and fiscal policies. A detailed presentation ofthe forecast for the short term, 2012–2013, is found in the fivechapters immediately thereafter.International DevelopmentsAFTER-EFFECTS OF THE FINANCIAL CRISIS TO PERSISTThe after-effects of the rapid build-up of private debt during theyears preceding the financial crisis will continue to impact theworld economy for several years to come. GDP growth andresource utilization in the OECD countries will admittedly berising for the next few years, but growth will be limited comparedto previous recoveries. The level of GDP in the OECDcountries in 2016 is forecast to be more than 10 percent lowerthan if GDP growth had been in line with the trend for 1998–2007 (see Diagram 20).Before the crisis, it was often emphasized that imbalances innet lending between countries, as reflected in the current accounts,were a threat to the stability of the world economy. Surplusesor deficits in the current accounts of different countriesare not a problem in themselves, but may be an indication that ahigh level of net lending in countries, due to demographic factors,for example, is being channelled into countries where thereturn on investment is higher. If countries with deficits importcapital for investments that will raise the long-term level ofGDP, this will in time contribute to higher global growth. In theyears before the financial crisis, however, net lending was channelledprimarily into developed countries, where housing investmentand private debt, for example, rapidly increased.Diagram 20 GDP in OECD CountriesIndex 2007=10013012011010090807098000204060810GDPProjection of trend 1998-2007Sources: OECD and NIER.121416130120110100908070