Forecast revisions 2013-14.

This section outlines the principal revisions to the forecast published in The Swedish Economy, March 2013.

* Global economic developments will, on average, depart only marginally from the March forecast, and the GDP growth forecast for the OECD is unchanged.

* Swedish GDP growth was surprisingly strong in the first quarter, but several temporary factors contributed to this, so the growth forecast for the second quarter has been revised down (see Diagram 15).

* Although GDP has been stronger, both exports and business investment have been weaker. It is primarily investment in manufacturing that has underperformed. The slightly weaker outlook for export demand and the limited investment plans in Statistics Sweden's latest investment survey have prompted a marked downward revision of the investment forecast for 2013.

* Household consumption is expected to grow slightly more strongly this year and next than in the previous forecast. This is partly because real disposable income is forecast to increase more quickly as a result of bigger tax reductions for households than assumed in March.

* All in all, this means that the forecast for GDP growth has been revised up slightly for both 2013 and 2014.

* Inflation has been lower than envisaged and is expected to remain lower for the rest of this year, as indicated, for example, by weak producer price inflation. The slower rate of inflation is also due to lower oil prices than expected. The forecast for core inflation as measured by the CPIF has also been revised down for 2014 (see Diagram 16).

* Employment has grown slightly more strongly than foreseen, but so has the labour force, which means that unemployment has been marginally higher than predicted in March. Employment is expected to continue to grow slightly more strongly (see Diagram 17).

* Little new information about fiscal policy for 2014 has emerged, but based on the 2013 Spring Fiscal Policy Bill and the limited statements made by government representatives, the NIER estimates that the government will announce SEK 20 billion in unfunded measures for 2014, which is SEK 5 billion more than in the previous forecast.

(1) The NIER believes that cyclically-adjusted net lending of 1.2 per cent of potential GDP is needed for actual net lending to average 1 per cent over the business cycle. This is because economic growth is more often low than high--see also the special analysis "The Surplus Target for General Government Finances" in The Swedish Economy, March 2013.

(2) The rise in gross debt in 2013 is due mainly to the Riksbank's reinforcement of its foreign exchange reserves, which is being financed through increased borrowing from the National Debt Office. This will not affect the government's net position, as it is offset by a claim on the Riksbank.

Table 2 Current Forecast and Revisions Compared to the March
2013 Forecast

Percentage change unless otherwise stated

 2013

 June

 2013 Diff.

International
GDP, world-wide 3.2 -0.1
GDP, DECD 1.3 0.0
GDP, Euro Area -0.7 -0.3
GDP, United States 1.9 0.2
GDP, China 7.9 -0.2
Federal funds target rate (1,2) 0.25 0.00
ECB refi rate (1,2) 0.50 -0.25
Oil price (3) 105.6 -3.7
CPI, OECD 1.7 -0.2
GDP by Expenditure

GDP, calendar-adjusted 1.5 0.2
GDP 1.5 0.2
Household consumption 2.8 0.3
General government consumption 0.9 0.0
Gross fixed capital formation -3.1 -4.4
Stockbuilding (4) 0.3 0.3
Exports -0.5 -1.8
Imports -0.9 -3.3

Labour Market, Inflation, Interest Rates etc.
Hours worked (5) -0.1 -0.3
Employment 0.7 0.2
Unemployment (6) 8.3 0.1
Labour market gap (7) -1.8 0.1
GDP gap (8) -2.1 0.6
Productivity, business sector (5) 2.3 1.0
Hourly earnings (9) 2.8 0.0
CPI 0.1 -0.1
CPIF 1.0 -0.1
Repo rate (1,2) 1.00 0.00
Interest rate, 10-year government bond (1) 1.8 -0.5
Index for the Swedish krona (KIX) (10) 102.8 1.1
Current account (4) 6.3 0.1
General government net lending (11) -1.5 -0.1

 2014

 June

 2013 Diff

International
GDP, world-wide 4.0 -0.1
GDP, DECD 2.3 0.0
GDP, Euro Area 1.2 0.0
GDP, United States 2.8 0.1
GDP, China 8.0 -0.2
Federal funds target rate (1,2) 0.25 0.00
ECB refi rate (1,2) 0.50 -0.25
Oil price (3) 103.6 -3.4
CPI, OECD 1.9 0.0
GDP by Expenditure

GDP, calendar-adjusted 2.7 0.2
GDP 2.5 0.2
Household consumption 3.0 0.3
General government consumption 0.6 -0.1
Gross fixed capital formation 4.6 0.9
Stockbuilding (4) 0.0 0.0
Exports 4.4 -0.2
Imports 4.9 -0.1

Labour Market, Inflation, Interest Rates etc.
Hours worked (5) 0.8 0.2
Employment 0.5 0.1
Unemployment (6) 8.3 0.1
Labour market gap (7) -1.7 0.1
GDP gap (8) -1.7 0.4
Productivity, business sector (5) 2.3 -0.1
Hourly earnings (9) 2.7 0.0
CPI 0.8 -0.3
CPIF 1.3 -0.1
Repo rate (1,2) 1.00 0.00
Interest rate, 10-year government bond (1) 2.4 -0.8
Index for the Swedish krona (KIX) (10) 102.6 0.4
Current account (4) 6.2 0.2
General government net lending (11) -1.2 0.0

(1) Per cent. (2) At year-end. (3) Dollar per barrel, annual average.
(4) Change in per cent of GDP preceding year. (5) Calendar-adjusted.
(6) Level, per cent of labour force. (7) Difference between actual and
potential hours worked, in per cent of potential hours worked. (8)
Difference between actual and potential GDP, in per cent of potential
GDP. (9) According to Short-term Earnings Statistics. (10) Index
1992-11-18=100. " Per cent of GDP.

Note. The difference is between the current forecast and the June 2013
forecast. A positive value denotes an upward revision.

Source: NIER.