Tariffs, unstable global situation and war in the Middle East are not among the things that have a decisive impact on households' consumption willingness, Albin Kainelainen believes.
Instead, it is mainly the ripple effects of inflation and price increases on food that persist longer than we thought, and which have placed a lingering wet blanket on both households' consumption and companies' investment willingness, he means.
One should remember how big a shock the high prices were for households and how it took away ten years of real wage increases, says Albin Kainelainen to TT.
No “all-time-low”
The National Institute of Economic Research is sticking to its previous forecast of a small recovery in the economy already this year. This gives a slightly brighter picture of the coming years than the one the government presented on Tuesday. This is because the NIER expects upcoming initiatives in the government's budget that are expected to benefit the economy, emphasizes Albin Kainelainen. The growth, which according to the government's forecast this year stops at 0.9 percent, is low, he notes.
It is lower than the historical average and it keeps us in a low-conjuncture. But it is no “all-time-low” figure.
During the pandemic year 2020, the growth was, for example, negative, -1.9 percent, but bounced back the following year, and for 2023, the growth was -0.2 percent compared to the previous year.
Forecasts consumption increase
Now that households, on the other hand, have received an income increase, we will see effects of it, he forecasts.
The Swedish Central Bank has lowered the interest rate and real wage increases are starting to catch up on the eroding effect of inflation on people's economy.
Decreased unemployment is delayed
The government's forecast of an initially deepening unemployment is, however, in line with the National Institute of Economic Research's, according to Albin Kainelainen. The reason is that companies during this economic downturn have not gotten rid of labor as quickly as during the pandemic years. With the memory of how difficult it was to get labor back then, they have postponed it.
Therefore, it will take longer before we see that unemployment starts to decrease, says Albin Kainelainen.
