Minister of Finance Elisabeth Svantesson (The Moderate Party) expects in the short term that the USA with Donald Trump as president will have an expansive fiscal policy, higher growth, and an increased budget deficit.
Even when Biden took office, there were quite a few stimulus packages and we expect the same from Trump, she says and continues:
They will have some tax cuts and increased expenditures in the short term. It will increase growth and give a boost.
Tariffs a major challenge
In the long term, tariffs and trade protectionism, in combination with an expansive fiscal policy, are feared to pose risks of increased inflation.
If there is an expansive budget in the near future, the risk is that inflation will take off. Then interest rates will be affected, of course, says Svantesson.
Whatever happens, it will affect the Swedish economy.
Elisabeth Svantesson is concerned about the USA's growing national debt.
In the long run, it is problematic. Very large budget deficits can also lead to increased inflation, she says.
Is there a risk that Swedish inflation will also take off with Trump's policy?
To some extent, yes, but it is not the major challenge for the Swedish economy. The major challenge is if tariffs, for example, become very high.
Tariffs and trade barriers in general do not make the world richer, but they make us all poorer, including the Americans.
The greatest risk she sees, however, is with the support to Ukraine.
We are following it closely. The USA has been an important partner in the support to Ukraine and we hope it will continue. If it does not, we must be prepared to take greater responsibility in the EU.
Focus inward
Donald Trump's victory does not currently affect the government's forecasts for the economy.
First, we must know exactly what Trump and his administration intend to do, says Svantesson.
She thinks that Sweden and the other EU countries should turn their attention inward and focus more on "our own shortcomings".
We have too low productivity together. We are working hard to increase ours and everyone must do so to catch up with the American economy, says Svantesson.
