Swedish finance minister more upbeat about economic recovery

Stockholm - Swedish Finance Minister Anders Borg was slightly more upbeat Monday about the Swedish economy as he presented new forecasts, concluding that "the world had landed on its feet" after the global financial crisis. Although the data showed gross national product (GNP) set to shrink by 4.9 per cent in this year, the forecasts continued to predict growth in 2010. Indeed, the growth forecast released Monday bumped up from 0.6 per cent to 2.0 per cent growth.

"Sweden has avoided a depression, and not had a banking crisis and there was no collapse of the public finances," said Borg.

Unemployment and the labour market would however "remain challenging," he said, citing the need to continue an expansive economic policy for sometime ahead.

This year unemployment was estimated to be 8.5 per cent, before rising to 10.7 per cent next year. However, in 2011, it was forecast to settle at around 10.5 per cent - one percentage point lower than earlier estimates suggested.

Risks included pulling back stimulus programmes too soon, before the economic recovery becomes more stable, Borg said. He also noted that Sweden's export-oriented economy was dependent on international developments.

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