There is a risk of long-term economic consequences from the corona crisis in the form of high unemployment and social exclusion in
In its new macroeconomic report,
"Both fiscal policy and monetary policy should be as expansionary as possible," says the Bank's Chief Economist,
Many service sectors are in freefall and
We believe that unemployment will rise to over 10 percent during the autumn before gradually falling again. The younger generation and foreign-born citizens will feel the brunt of the impact and there is a clear risk that weak groups will be permanently locked out of the labour market.
Given the assumption that restrictions around the world will begin to be eased early in the summer, we expect growth in
Nevertheless, the risk of a setback linked to the spread of the virus is creating uncertainty that will affect households' and companies' financial plans. All told, it means that the recovery will occur gradually and result in a higher unemployment rate than previously.
The in-depth analysis in our macroeconomic report lays out two alternative scenarios for
We believe the government will introduce further emergency and stimulus measures that could take the total amount to 4 percent of GDP, compared to 2.7 percent during the financial crisis. Public debt would thereby rise from 35 percent of GDP before the corona-crisis to 45 percent of GDP, which is still relatively low in international terms. The Riksbank has implemented a number of measures to reduce the risk of disruptions to the financial system. Although an interest rate cut is not formally excluded, the Riksbank interprets that zero is the new lower limit for the repo rate. We therefore expect the repo rate to remain at zero throughout the forecast period.
For further information, please contact:
Read more about alternative scenarios and policy measures in our in-depth articles.
For more information about
For the full report in Swedish, see Konjunkturprognos (https://www.handelsbanken.se/sv/foretag/placera/konjunkturprognos) and in English, Global Macro Forecast (https://www.handelsbanken.se/en/corporate/investments/global-macro-forecast)
[image]
https://news.cision.com/handelsbanken/r/handelsbanken--sweden-can-afford-to-invest-more,c3099634
https://mb.cision.com/Main/3555/3099634/1238294.pdf
https://mb.cision.com/Public/3555/3099634/a12f4ec712e37a28.xlsx
https://news.cision.com/handelsbanken/i/tabel,c2778965
(c) 2020 Cision. All rights reserved., source