Sweden’s GDP grew 3.3% at an annual rate during the first quarter of the year, the highest level for two years, according to preliminary figures from Statistics Sweden. It is primarily household consumption and domestic investments that are pushing growth.
SEB economist Olle Holmgren comments that the economy looks strong although there are indications of a slowdown ahead. He says public investment and industrial investment are going in the right direction and will weigh up a fall in construction investments.
For Finance Minister Magdalena Andersson, the figures from Statistics Sweden, confirm that growth in Sweden is stable and strong.
The krona strengthened against the euro and the dollar on publication.
Johan Carlström has been elected as the new chairperson of Fingerprint Cards AB. The controversial principle owner, who is being prosecuted for insider trading in the company, received a majority of the votes during the AGM in Gothenburg.
During the AGM, shareholder Ronald Bengtsson, former CEO of D Carnegie, was critical of the board for the way in which it has run the company. He also opposed the election of Carlström commenting: “This is a Johan Carlström one-man show.”
The European Commission has given the go-ahead for the Danish state to compensate Post Danmark via owner PostNord with up to the equivalent of SEK 1.7 billion up until 2019. PostNord has been forced to let between 3,000 and 4,000 employees in Sweden go.
SvD also reports that PostNord is entering the world of digital mailboxes and will launch an app in the autumn.
Finance Minister Magdalena Andersson (S) has responded to criticism from the Riksbank and the European Commission about household debt, highlighting the government’s 22-point programme to increase house construction.
Speaking to journalists on her way into the Ecofin meeting on Friday, she said, “The situation on the housing market is different to what it was several months ago. We are seeing house prices cooling, not least because of the range of newly produced housing.”
On Wednesday, both the Riksbank and the European Commission repeated that the government’s efforts to address household’s high debts were insufficient. Both recommended lowering the interest rate tax deduction. In addition the Commission ordered a rise in property tax, changes to capital gains and more competition within construction.
US President Donald Trump has ordered a probe into vehicle imports, which could bring new tariffs. The probe rests on a 1962 regulation which lets the president restrict imports in the name of national security. This is the statute that was invoked to allow the US administration’s tariffs on steel and aluminium, and is seen as a way of bypassing WTO rules. Shares in German and Asian automakers fell on the news.
Volvo Cars will start production of the S60 at its new plant in South Carolina later this year and it is conceivable that the auto maker could manufacture other models at the plant, if the tariffs come into force, reports Dagens Industri (DI).
When asked about the threat of US tariffs earlier this year, Volvo Chief Executive Håkan Samuelsson said that trade barriers and tariffs would have a massive impact on the auto industry. “Everything will cost more and it will be the customer who will have to pay. Free trade is good for everyone. We are building a plant in the US, where we are creating 4,000 jobs and we will export half of the volume. If we are not allowed to export, we will only be able to create half the number of jobs.”
High levels of household debt are the biggest risk to Sweden’s financial system, said the Riksbank, the Swedish central bank, in its semi-annual financial stability report, published on Wednesday. Despite a recent cooling off in the housing market, house prices remain high in relation to household assets.
Concerned over the fact that 70 per cent of all mortgages in Sweden are variable rate mortgages, thereby making households sensitive to interest rate increases, Riksbank Governor Stefan Ingves has called on politicians to legislate so that home owners are forced to borrow a larger share of their loans at a fixed rate.
Meanwhile, a number of the parliamentary parties have indicated that they want to scrap tighter amortisation requirements, introduced on 1 March this year. Talking to Svenska Dagbladet, Stefan Ingves warns that such a move would heighten the risks in the economy.
Sweden faces a number of challenges to growth and the economy could slow down quickly if there is no reform, which would have a devastating impact on welfare, jobs and social cohesion, writes Moderate leader Ulf Kristersson, along with Elisabeth Svantesson and Niklas Wykman.
The three propose a number of measures to help fuel growth; these include a housing package to help companies recruit foreign expertise, the appointment of a delegation to put forward proposals on ways to raise productivity, funding to help people change careers mid-life and a reform of the tax system to attract investment.
There has been criticism of President Trump’s latest moves around a trade war with China. At the weekend hopes were raised that a trade war between the US and China could be avoided. US Secretary of the Treasury Steven Mnuchin said that the tariffs had been paused as both countries try to reach agreement.
According to the US, China has undertaken to reduce the trade deficit by as much as USD 200 billion, while China denies there is any such promise.
SEB’s head strategist, Johan Javeus, feels there is a risk that the economic policy in the US will have the opposite effect from that intended: increasing the trade deficit for the US. “The tax reductions announced are going to lead to people consuming more and, to a large extent, it will be goods that are not manufactured in the US,” he says. He also points out that attempts to change the course of trade between two countries usually take a very long time.
In a debate article in Dagens Industri (DI) on Saturday, ABB Sweden’s CEO Johan Söderström wrote that the company has been impacted by experts, who work for the Swedish company, being deported due to minor administrative errors.
The experts are people who have come to Sweden on a job offer, have laid down roots, learned Swedish, worked, paid tax and contributed to society. He writes that ABB considers industry’s competitive advantage to be dependent on Sweden’s capacity to attract talent. ABB urges the government and parliament to introduce an amnesty for labour immigrants who, after several years in Sweden, have been affected by deportation orders.
Sweden is in desperate need of labour. “We want to drive progress that strengthens Sweden’s competitive power and contributes to Swedish welfare.”
The American payment service Paypal is to buy the fast-growing Swedish fin-tech company iZettle, confirms Paypal’s CEO Dan Schulman for Bloomberg.
The price is SEK 19 billion and the deal is expected to be completed during the third quarter.
Since being founded, iZettle has become established as a supplier of till systems and e-commerce platforms in the Nordic countries, the UK, Spain, Mexico and Brazil.
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