nordic outlook may 2010
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Growth accelerating, but di! cult post-crisis choices aheadNew focus on government debt and fi nancial regulations
Nordic OutlookEconomic Research – May 2010
Nordic Outlook – May 2010 | 3
Contents
International overview 5
The United Kingdom 28
Boxes
4 | Nordic Outlook – May 2010
Economic Research
This report was published on May 4, 2010.
Cut-o! date for calculations and forecasts was April 29, 2010.
Robert Bergqvist Håkan FrisénChief Economist Head of Economic Research+ 46 8 506 230 16 + 46 8 763 80 67
Daniel Bergvall Mattias BruérEconomist Economist+46 8 763 85 94 + 46 8 763 85 06
Ann Enshagen Lavebrink Mikael JohanssonEditorial Assistant Economist+ 46 8 763 80 77 + 46 8 763 80 93
Tomas LindströmEconomist+ 46 8 763 80 28
Gunilla Nyström Ingela HemmingGlobal Head of Personal Finance Research Global Head of Small Business Research+ 46 8 763 65 81 + 46 8 763 82 97
Susanne Eliasson Johanna WahlstenPersonal Finance Analyst Small Business Analyst+ 46 8 763 65 88 + 46 8 763 80 72
SEB Economic Research, K-A3, SE-106 40 Stockholm
Contributions to this report have been made by Thomas Köbel, Klaus Schrüfer, SEB Frankfurt/M and Olle Holmgren, Trading Strategy. Stein Bruun, SEB Oslo is responsible for the Norwegian analysis
See disclaimer on page 50.
International overview
Nordic Outlook – May 2010 | 5
Recovery despite imbalances and crises
reassessed
and a
OECD
SEB
economies
American
German
the opment (OECD)
The
mitments
6 | Nordic Outlook – May 2010
International overview
2008 2009 2010 2011
OECD World, PPP*
Nordic Outlook – May 2010 | 7
International overview
2000 2009 2000 2009 2000 2009
cent
tre recovery
GDP OECD
positive spiral in
dip scenario
8 | Nordic Outlook – May 2010
International overview
82 88
5
ally been resilient
US
The
Nordic Outlook – May 2010 | 9
International overview
US
SEB
Sweden US
United Kingdom
Nov Jan Sep Nov Jan
2
5
8
2
5
8
10 | Nordic Outlook – May 2010
International overview
Key interest rates
US Bank of England
2
5
2
5 SEB
December be
tries
US
SEB
Nordic Outlook – May 2010 | 11
International overview
Jan Sep Jan Sep Jan Sep Jan
system
Currency movements since the EUR/USD peakPercentage change against USD since December 3, 2009
-15,0%
-13,0%
-11,0%
-9,0%
-7,0%
-5,0%
-3,0%
-1,0%
1,0%
3,0%
5,0%
CADMXN
INRKRW
AUDNZDTRYCNYRUBBRLNOKSEK
JPYGBPCHFPLNEUR
The Japanese yen
The
12 | Nordic Outlook – May 2010
International overview
Nordic Outlook – May 2010 | 13
International overview
14 | Nordic Outlook – May 2010
Theme: Reforming the financial infrastructure
resilience and stability
more
Settlements Financial Stability Board
(
more and
(
proposals
TODAYTODAY FUTUREFUTURE
= Real economy = Credit/banking market
Nordic Outlook – May 2010 | 15
Theme
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0Credit growth
680
180
350
100
400
280
80
70
20100
0
100
200
300
400
500
600
700
800
900
US UK Eurozone OtherEurope
Asia
Expected writedowns, USD bn
Realised writedowns, USD bn
The United States
16 | Nordic Outlook – May 2010
GDP
per cent next year
Inventory contribution Net effect of stimulus
GDP growth
Source: CBO, Recovery.gov, SEB
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q409 10 11
-2
-1
0
1
2
3
4
5
6
-2
-1
0
1
2
3
4
5
6
2
5
Index
88
5
25
55
Nordic Outlook – May 2010 | 17
The United States
Ratio
82 88
85
25
225
18 | Nordic Outlook – May 2010
The United States
2011
FHFA
8585
gov
We expect US
8.9 per cent in 2011
Nordic Outlook – May 2010 | 19
The United States
CPI inflation
55 85
Core inflation Headline inflation
2
5
2
5 SEB
88
5
25
5
25
85
55
20 | Nordic Outlook – May 2010
The United States
88
Federal debt
One common rule of thumb is that government bond yields rise by about 50 basis points if their credit rating is downgraded by one step.
Debt to GDP ratios
United Kingdom Canada
82 88
SEB
*
Japan
Nordic Outlook – May 2010 | 21
Japan
Jan Sep Jan Sep Jan Sep Jan Sep Jan
that the
and
Asia
22 | Nordic Outlook – May 2010
per cent
2011.
China India
Jan Sep Jan Sep Jan Sep Jan
-2.5
0.0
2.5
5.0
7.5
10.0
12.5
15.0
The euro zone
Nordic Outlook – May 2010 | 23
85
forecastSEB
Exports
24 | Nordic Outlook – May 2010
The euro zone
After Greece, Portugal is the country that runs the great-est risk of being hit by market instability. Large government
political experience of belt-tightening programmes, make this small economy highly vulnerable. After that comes Spain, whose extremely high unemployment and weak real estate market provide fertile ground for market scepti-cism to emerge.
Ireland
SloveniaItaly
Finland
Spain
Slovakia
Finland
trend in Germany
5
10.2
Nordic Outlook – May 2010 | 25
The euro zone
that
,
cent next year
Ireland Italy Spain
2009
Budget balance, debt and current account (CA) are measured as HICP, Core) as the
each country and the euro zone average.
Source: European Commission, IMF, SEB
26 | Nordic Outlook – May 2010
The euro zone
Core inflation HICP inflation
SEB
Refi rate
Jan Apr Jan Apr Jan Apr
Nordic Outlook – May 2010 | 27
The euro zone
Bond yields
The table shows by how many hundredths of a percentage point (basis points) yields with different maturities (10, 5 and 2 years) and yield curves (10yr-3m, 5yr-3m, 2yr-3m) are
government debt are one percentage point higher.
Source: SEB
The United Kingdom
28 | Nordic Outlook – May 2010
fall to
Nordic Outlook
United Kingdom Italy
Jan Apr Jan Apr Jan Apr
25
225
25
225
Easten Europe
Nordic Outlook – May 2010 | 29
Index
Poland Slovakia
We are
Poland
The Baltics
30 | Nordic Outlook – May 2010
A
Exports
Latvia
06 07 08 09
domestic demand
ances
matically
Nordic Outlook – May 2010 | 31
The Baltics
Eastern European Out-‐
look
Slovakia
on
Latvian government priority
5
85
The
are strained
Sweden
32 | Nordic Outlook – May 2010
9.00
Nordic Outlook
5
Nordic Outlook – May 2010 | 33
Sweden
2009 2009 2010 2011
USSweden
34 | Nordic Outlook – May 2010
Sweden
98 99 00 01 02 03 04 05 06 07 08 09 10 11
8522
28
2008 2009 2010 2011
and then
11100908070605
4650
4600
4550
4500
4450
4400
4350
4300
9.0
8.5
8.0
7.5
7.0
6.5
6.0
5.5Source: Statistics Sweden, SEB
Employment has turned around
SEB
Number of jobs, thousands (LHS)Unemployment, per cent (RHS)
small
Nordic Outlook – May 2010 | 35
Sweden
and 2.2 per cent in 2011
indicates
1 year
104
103
102
101
100
99
104
103
102
101
100
99
Source: Statistics Sweden, SEB
GDP at turning pointsIndex
2009Q1 = 100
2005Q1 = 100
1997Q1 = 100
1993Q3 = 100
1 year
102.0
101.5
101.0
100.5
100.0
99.5
102.0
101.5
101.0
100.5
100.0
99.5
Source: Statistics Sweden, SEB
Employment at turning pointsIndex
Sep. 2009 = 100
May 2005 = 100
May 1997 = 100
March 1994 = 100
36 | Nordic Outlook – May 2010
Sweden
2010 2011 Employees
of Nordic Outlook that
Total lending
We are
CPIF
jan maj jan maj jan maj jan maj
Nordic Outlook – May 2010 | 37
Sweden
82 88
5
8
SEB
Sweden
SEB
38 | Nordic Outlook – May 2010
Sweden
per cent
2008 2009 2010 2011
Nordic Outlook – May 2010 | 39
Sweden
Nordic Outlook
2010 2011
In 2010 and
40 | Nordic Outlook – May 2010
Sweden
be extra clear.
Denmark
Nordic Outlook – May 2010 | 41
Denmark
overheating are mand
1.8 per cent in 2011
stabilisation tendencies in
World
Economic Outlook
points.
Norway
42 | Nordic Outlook – May 2010
demand
Strong income supports consumption % change (4Q)
-4
-2
0
2
4
6
8
10
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09-4
-2
0
2
4
6
8
10% change (4Q), 2Q average
Private consumption (LHS)Real disposable income excl. share dividends (LHS)
2010
re
covery in residential investment
The Norwegian
Nordic Outlook – May 2010 | 43
Norway
Unemployment shows signs of peaking % of labour force
0
1
2
3
4
5
6
7
8
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 090
1
2
3
4
5
6
7
8% of labour force
LFS unemployment rate, 3 mth. average Registered unemployed
Wage growth and unemployment % change (YoY)
0.0
1.5
3.0
4.5
6.0
7.5
9.0
10.5
87 89 91 93 95 97 99 01 03 05 07 09 11
% of labour force0
1
2
3
4
5
6
7
Annual wages (LHS)LFS unemployment rate (RHS)
Core inflation heading lower % change (12M)
-4.5
-3.0
-1.5
0.0
1.5
3.0
4.5
6.0
95 97 99 01 03 05 07 09-4.5
-3.0
-1.5
0.0
1.5
3.0
4.5
6.0% change (12M)
CPI excl. taxes and energyCore CPI domestic goods and servicesCore CPI imported consumer goods
in 2009
44 | Nordic Outlook – May 2010
Norway
Monetary Policy Report
Norges Bank deposit rate and rate path Level, %
012345678910
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12012345678910
Level, %
Norges Bank deposit rate Optimal rate path, MPR 1/10Optimal rate path, MPR 3/09
modus operandi
Monetary Policy Report
Stronger NOK is denting inflation % change (12M)
-6
-4
-2
0
2
4
6
99 00 01 02 03 04 05 06 07 08 09 10
-20
-15
-10
-5
0
5
10
15
20
% change (12M), reversed
Core CPI imported consumer goods (LHS)NOK import-weighted index, 6 mth. earlier (RHS)
Finland
Nordic Outlook – May 2010 | 45
Index
year
cent in 2011
Pay
and next
Increased activity early in 2010
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
8
46 | Nordic Outlook – May 2010
Nordic key economic data
2009 level,
DKK bn 2008 2009 2010 2011
2009 level,
Nordic Outlook – May 2010 | 47
Nordic key economic data
2009 level,
SEK bn 2008 2009 2010 2011
FINANCIAL FORECASTS
2009 level,
EUR bn 2008 2009 2010 2011
48 | Nordic Outlook – May 2010
Nordic key economic data
2009 level,
EUR bn 2008 2009 2010 2011
US
2009 level,
USD bn 2008 2009 2010 2011
2008 2009 2010 2011
GDP
Unemployment
Nordic Outlook – May 2010 | 49
Nordic key economic data
2008 2009 2010 2011
GDP,
Bond yields
2008 2009 2010 2011
50 | Nordic Outlook – May 2010
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