The subdued inflation opens up for a greater reform scope in the government's autumn budget, according to Swedbank's chief economist Mattias Persson.
It is time to invest more in the future, he says.
The government is lowering the forecast for inflation and raising the growth forecast for this year. According to Finance Minister Elisabeth Svantesson (The Moderate Party), the battle against inflation has been won.
I share the view that inflation appears to be clearly below target going forward. Possibly the Finance Minister is a bit too pessimistic about the future when looking at the opportunities for the Riksbank to lower the interest rate – and above all what lower inflation means for households' purchasing power in Sweden, says Mattias Persson.
Inflation below target
Nordea's chief economist Annika Winsth also believes that inflation will be below target in the coming year.
Even next year, it will be below target is our assessment.
On the other hand, Annika Winsth believes that the growth forecast is too optimistic from the government.
It is a bit too high. I would say 1 per cent this year and then maybe 2.5 per cent for 2025.
Despite the brighter economic outlook, Svantesson was cautious about discussing an increased reform scope in the autumn budget at a press conference. The government will present a new economic forecast in August.
The details were lacking. We know that there will be reforms and it is time for more reforms, to step on the gas now in fiscal policy, says Mattias Persson.
Expecting investments
Job tax deductions, changed tax on ISK, and reduced basic allowance for pensioners are some investments that Mattias Persson is expecting.
All of that will come, even if we do not know how much it will be. Currently, we are counting on 50 billion in unfunded reforms, but it could very well be more.
Annika Winsth believes that municipalities and regions will primarily need support going forward.
Municipalities and regions have a very vulnerable position. They are affected by the low-conjuncture economy both through tax revenues and then they have large investment needs. And they are also affected by the inflation that has been and higher interest rates.
Which makes me believe that they may need more support.
