Swedbank Economic Outlook - Update, April 2015

Swedbank Economic Outlook Update
Budding spring with spells of night frost

Macro Research April 2015
Swedbank
Table of Contents
1. Executive Summary
2. Global Outlook: The global recovery is propped up by monetary policy
3. US: A rebound that faded

4. EMU: Recovery gaining momentum
5. Emerging markets: Credit Ratings At Risk
6. Sweden: Domestic demand remains the main engine for growth
7. Nordic area: A pick up since last winter
8. The Baltics
9. Appendix: Key economic indicators
Swedbank
Executive Summary
Swedbank
Mature economies will provide stability in

the global recovery, propped up by
monetary policy
Emerging economies will face increased

volatility, but some are better prepared
than others
Sweden will have adapt to ECB

expansion, Norway to oil price swings and
the Baltic countries to the squeeze
between Russia and the euro area
Global outlook: The global recovery is propped up by

monetary policy
Contribution to global growth (ppt)
India
4,5
3,6
4,0
3,5
3,4
3,7
3,5
Pick up in mature economies despite some

set backs. We expect USA and Germany to
lead the way.
Emerging economies in between energy

prices and Fed; but China and to an
increasing extent India will provide the bulk
of global growth
Risks are evenly balanced;
China
3,0
Japan
2,5
EMU countries
2,0
1,5
USA
1,0
0,5
Others
0,0
Global GDP (PPP)
-0,5
2013
2014
2015
Sources: Ecowin and Swedbank's forecasts.
2016
Risks to the forecast (prob. in %)

70
Main
Main
60
50
40
30
Worse
Better
Worse Better
20
10
Downside risks are mainly coming from an

uncontrollable unravelling of Chinese
imbalances, from a sustained slowdown of the
US economy and Grexit
Upside risks reside primarily in a strongerthan-expected pick up in the euro area
combined with a rebound of the US economy
0
Source: Swedbank
Swedbank
April
January
4
Global Outlook cont.: Monetary policy tensions spread

to currency and asset markets
Central bank policy rates (%)
2,00
1,50
We expect Federal Reserve to raise in

September, while ECB will continue to
expand its balance sheet
Riksbank will cut as will Norges Bank but

from different levels
Interest rate differentials and exchange

volatility will grow
Fed
1,00
BoE
0,50
Norges bank
0,00
Riksbank
-0,50
ECB
-1,00
Source: Swedbank's forecasts
Interest rate diff. USA vs EMU

2,5
2,0
Policy rate
5y
1,5
10y
1,0
2y
0,5
0,0
17-Apr-15
mid 2015
end 2015
mid 2016
end 2016
Sources: Reuters EcoWin and Swedbank

Swedbank
Global Outlook: Tables

Swedbanks global GDP forecast 1/ (annual percentage change)
USA
EMU countries
Germany
France
Italy
Spain
Finland
UK
Denmark
Norw ay
Japan
China
India
Brazil
Russia
Global GDP in PPP 2/
2013
2,2
-0,4
0,2
0,4
-1,7
-1,2
-1,3
1,7
-0,5
2,3
1,6
7,9
6,3
2,7
1,3
3,4
2014
2,4
(2,4)
0,9
(0,8)
1,6
(1,5)
0,4
(0,3)
-0,4 (-0,4)
1,4
(1,3)
-0,1 (-0,3)
2,8
(2,6)
1,1
(0,9)
2,3
(2,6)
-0,1 (0,2)
7,6
(7,5)
6,9
(5,2)
0,2
(0,2)
0,7
(0,5)
3,5
(3,4)
2015f
2,9
(3,2)
1,4
(1,1)
2,0
(1,5)
0,9
(0,6)
0,1
(0,0)
2,5
(2,0)
0,1 (-0,0)
2,4
(2,5)
2,0
(1,8)
1,2
(1,3)
0,8
(1,0)
6,8
(7,1)
7,3
(6,6)
-1,2 (0,7)
-5,5 (-6,0)
3,6
(3,7)
2016f
2,8
(2,8)
1,9
(1,9)
2,2
(2,2)
1,8
(1,7)
1,2
(1,2)
2,5
(2,3)
0,9
(0,8)
2,4
(2,2)
2,3
(2,3)
1,4
(1,7)
1,1
(1,1)
6,6
(6,8)
7,7
(7,0)
-0,8 (1,8)
-2,0 (-2,5)
3,7
(3,8)
1/ January 2015 f orecasts in parenthesis.

2/ World Bank weights (rev ised 2014).
Sources: IMF and Swedbank.
Interest and exchange rate assumptions, %

Outcom e Forecast
2015
15-Apr
Policy rates
Federal Reserve, USA
0,25
0,25
0,50
1,00
1,50
European Central Bank
0,05
0,05
0,05
0,05
0,05
Bank of England
0,50
0,50
0,50
0,75
1,00
Bank of Japan
0,10
0,10
0,10
0,10
0,10
Governm ent bond rates

Germany 2y
-0,3
-0,3
-0,3
0,1
0,5
Germany 10y
0,1
0,2
0,4
0,8
1,3
US 2y
0,5
0,6
1,1
1,7
2,2
US 10y
1,9
1,9
2,3
2,7
3,1
1,07
1,03
1,00
0,95
0,98
6,2
6,1
6,1
6,0
5,9
USD/JPY
119
121
125
127
129
EUR/GBP
0,72
0,71
0,71
0,68
USD/RUB
50
57
65
65
65
Exchange rates
EUR/USD
USD/CNY
Interest and exchange rate assumptions

Outcom e Forecast
2015 2015 2015 2016 2016
17-apr 30 Jun 31 Dec 30 Jun 31 Dec
Interest rates (%)
Sw edish repo rate
-0,25
-0,50
-0,50
-0,50
0,00
10-yr. gvt bond
0,24
0,20
0,60
1,10
1,70
Exchange rates
EUR/SEK
9,3
9,5
9,3
9,0
8,9
8,6
9,2
9,2
9,5
9,1
114,3
116,5
114,9
113,0
113,3
USD/SEK
KIX (SEK)
1/
2015
2015
2016
2016
30 Jun 31 Dec 30 Jun 31 Dec
So urces: Reuters Eco win and Swedbank.
1/ To tal co mpetitiveness weights. Trade-weighted exchange rate index fo r SEK.

So urces: Reuters Eco win and Swedbank
Swedbank
Global view
Swedbank
US: A rebound that faded

US: Real GDP growth
1,2
3,5
1,0
3,0
0,8
Growth declined in the fourth quarter of

2014, due to temporary factors, and
indicators suggest a continued weak
development in early 2015.
Job creation dropped significantly in the first

3 months of the year
2,5
0,6
0,4
2,0
0,2
1,5
0,0
1,0
-0,2
0,5
-0,4
-0,6
0,0
Q1-10 Q3-10 Q1-11 Q3-11 Q1-12 Q3-12 Q1-13 Q3-13 Q1-14 Q3-14
USA (qoq)
US yoy ann.
Source: Reuters EcoWin
US: Nonfarm payrolls

350
300
250
200
150
100
50
0
2012
2013
Monthly change
2014
3-month average
2015
12-month average

Swedbank
US: Balance sheets positioned for a pick up

US: Corporate profit & H.H net worth
(% of GDP)
500
12
10
450
8
6
400
4
350
2
0
300
2000
2002
2004
2005
2008
Corporate Profits
2010
2012
2014
Household Net Worth (RHS)
Source: IIF
US: Demand, deviation from trend

7
5
Business invest.
3
Households are saving, debt levels are

down
Moderate investments in housing
Business investments are lagging
Corporate profits and household wealth are
rising
Mid-way in the business cycle according to

demand components
Net
exports
Public sector
1
-1
-3
Households
-5
-7
1965 1969 1973 1977 1981 1986 1990 1994 1998 2002 2006 2011
Sources: Macrobond and Swedbank.
Swedbank
Oil price decline boosts growth and reduces inflation

US: Impact of oil price decline
1,5
1
0,5
0
-0,5
-1
Low oil price in particular beneficial to the

US, despite short term negative impact on
oil energy related sectors
Headline inflation will be suppressed
-1,5
-2
-2,5
World
DM
EM
OPEC
U.S.
GDP
CPI
Euro
Area
Japan
China
Source: IIF
US: Core inflation and wages (%)
4.5
4.0
Slack in labour market will hold back wage

developments for yet another period of time
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
CPI core
PCE core
Average hourly earnings
Source: Reuters Ecowin

Swedbank
10
US: Solid expansion and tempered policy tightening

US: Real GDP growth
1.2
4.0
1.0
3.5
0.8
3.0
0.6
Despite revising down growth to 2.9% (from

3.2%) from 2015 we remain cautiously
optimistic on US prospects. Growth for 2016
is forecast at 2.8%.
We stick to our view that Federal Reserve

will hike in September this year, and
thereafter twice per semester. FOMC recent
forecast revision moves them closer to our
call.
2.5
0.4
2.0
0.2
1.5
0.0
-0.2
USA (qoq)
-0.4
US yoy (rhs)
1.0
0.5
0.0
Q4-16
Q3-16
Q2-16
Q1-16
Q4-15
Q3-15
Q2-15
Q1-15
Q4-14
Q3-14
Q2-14
Q1-14
Q4-13
Q3-13
Q2-13
Q1-13
Q4-12
Q3-12
Q2-12
Q1-12
-0.6
FOMC median end-year forecast of target

4
rate
3,5
3
2,5
Mar 2015
2
1,5
Dec 2014
Sep 2014
0,5
Jun 2014
0
2014
Swedbank
2015
2016
2017 Long term
11
EMU: Recovery gaining momentum

EMU: PMI vs GDP
65
62,5
60
57,5
55
52,5
50
47,5
45
42,5
40
37,5
2007 2007 2008 2009 2010 2011 2012 2012 2013 2014 2015 2016
Composite PMI
GDP q/q (annual rate, %) (RHS)
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
Barometers have improved fast
Actual data have also improved
EMU: Composite PMI

65
65
60
60
55
55
50
50
45
45
40
40
35
Jan-07 Dec-07 Nov-08 Oct-09 Sep-10 Aug-11 Jul-12 Jun-13 May-14
35
Spain
France
Swedbank
Italy
German GDP growth picked up in Q4

Retail sales set for strong growth in Q1, consumer
confidence is strong
Employment is growing and unemployment falling
almost everywhere
Private credit is rising and the decrease in credit to
NF corp is decelerating firmly
Monetary stimulus will continue
PMIs have improved rapidly and now suggest

1.5% GDP growth on average
Other business barometers also rising
Exceptionally low interest rates

Weak EUR
Quantitative measures should give further boost to
credit growth
We revise up expected growth to 1.4-1.9%

2015/2016
Mostly on Germany and Spain, but most countries

in EMU stand to gain
Germany
12
UK: Politics in focus

UK: Contribution to growth (y/y, p.p.)
Net Trade
5,0
4,0
Gross capital formation

3,0
2,0
General government
final consumption
expenditure
NPISH final
consumption
expenditure
H.H final consumption
expenditure
1,0
0,0
-1,0
-2,0
2013 2013 2013 2013 2014 2014 2014 2014
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
GDP, y/y (%)
GDP growth for 2014 was revised up, but

dismal start to 2015
Note: Components may not sum due to rounding & inventories not included
Sources: ONS and Reuters EcoWin
Election on May 7 is expected to be a cliffhanger and the likelihood for a hung

parliament is high
Fiscal consolidation expected no matter turn out

Temporary depreciation of the pound likely around
election time
First rate hike to 0.75% postponed to 1Q

2016
Swedbank
Retail sales has developed strongly and PMIs signal

growth going forward
In 2015 growth is mainly domestically driven but global
growth gives support in 2016
In the medium to long term productivity has to increase
Worrisome development of the inflation

Pay growth remains weak
Over the year, a stronger pound dampens import prices
13
Japan: Recovery postponed, again

Japan: Economic sentiment
60
55
Abenomics, after 2 years:
50
Manufacturing PMI, SA
45
Services PMI
40
Composite PMI, SA
35
Growth is still expected to accelerate in

2015.
30
2008
2009
2010
2011
2012
2013
2014
2015
Source: Markit Economics
Japan: Prices, YoY change

7
70
60
50
40
CPI less fresh food

(LHS)
30
REER, JPY (RHS)
20
10
-1
-10
-2
-20
-3
2009
A grade for his monetary stimulus,

a B for his fiscal policy and
an E for the limited progress on structural reform.
A negative impact from the consumption tax rate hike is

waning.
A recent fall in oil prices will boost consumption.
Exports are getting stronger, benefitting from stronger
demand in the US but also from weaker yen.
As inflation is slowing, additional monetary

stimulus is expected before the end of 2015.
Monetary base, SA,

JPY (RHS)
Japan Nikkei 225
-30
2010
2011
2012
2013
2014
2015

Swedbank
14
Expansionary ECB and tighter Fed
Central bank balances

ln % of GDP
70
Central bank policy rates (%)

2,00
1,50
Fed
60
50
1,00
40
0,50
30
0,00
20
-0,50
10
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Japan
USA
UK
EMU
Swedbank
BoE
Norges bank
Riksbank
ECB
-1,00
Source: Swedbank's forecasts
15
Emerging markets: Credit Ratings At Risk
Swedbank
Major challenges for dollar borrowers!

A number of EM countries will likely face
high problems servicing their debt with large
refinancing risks in the next couple of years.
We expect a high degree of differentiation
between EM countries according to
implementation of macroeconomic reforms.
China: The economy is weak on a broad
basis. High need for economic stimulus.
India: Growth has disappointed. Challenge
is now to get important reforms approved in
the upper house.
Brazil: Weak demand from China, a strong
dollar, weak government finances, an
extensive corruption scandal, high inflation
and the biggest water shortage in modern
times are all impacting growth.
Russia: Consumers start to feel the bite with
real wages and retail volumes plummeting
16
Brazil: Unusually numerous and difficult challenges

Brazil: Real GDP (y/y, %)
10
9
8
7
6
5
4
3
2
1
0
2006
2007
2008
-12005
-2
-3
-4
Brazil is in recession
The Brazilian economy hurt by:
2009
2010
2011
2012
2013
2014
Brazil: Policy rate (%)

13
12
11
10
Slower growth in China

A stronger dollar
Weak government finances
Corruption scandals
High inflation
Tight policy to keep sovereign rating

High risk of political turbulence
A stronger dollar is a risk as external debt in
USD is high
A recovery will take time, which is a risk for a
setback in fiscal policy
9
8
7
Jan-10 Aug-10 Mar-11
Swedbank
Oct-11 May-12 Dec-12
Jul-13
Feb-14 Sep-14 Apr-15

17
Russia: Consumers start to feel the bite

Russia: Growth of retail, wages and prices (%, y/y)
20
15
10
Real gross wage
Consumers start to feel the bite with real

wages and retail volumes plummeting
Russia escaped recession last year owing to a massive

drop in imports, but in the second half of 2014
investments, exports, and government spending were
already falling.
We inch up GDP forecast to -5.5% in 2015 and -2% in

2016 (from -6% and -2.5%) due to less weak rouble
and somewhat higher oil price. Volatility in GDP
aggregates will be massive, e.g., consumption down by
more than 10%, investment by about 20%.
High inflation, financial squeeze, and bank bailouts;
continued capital outflows.
The rouble to depreciate further amid some volatility.
Reserves have decreased - still at good levels to
service forex debt, but insufficient for investments.
Retail trade
turnover
Consumer prices
-5
-10
-15
2009
2010
2011
2012
2013
2014
2015
Russia: FX, oil price & central bank reserves
550
110
90
475
400
70
Brent, USD (1. jan

2014 = 100)
USD/RUB, close
(1.jan 2014 = 100)
Major risks are political, not economic
50
30
Jan-14
325
Apr-14
Jul-14
Oct-14
Jan-15
250
Apr-15
Central bank
international
reserves, USD bn (rs)
Probabilities of baseline and negative scenarios very

closely matched. Baseline scenario hinges upon
calming of the RUS/UKR conflict during 2015, followed
by gradually eased sanctions in late 2016.
Negative scenario: crisis escalation, broader sanctions,
and deeper recession.

Swedbank
18
India: Good policy pays off in higher confidence

India: Current Account (% of GDP)
0
-0,5
-1
-1,5
-2
-2,5
-3
-3,5
-4
-4,5
-5
-5,5
India: PMI Manufacturing

59
58
57
56
55
54
53
52
India is one of the big winners of the lower

oil price
Strong improvement in the current account,
lower inflation and fx stability
Economic policy is tight in order to build
confidence
However, confidence comes with a cost growth has disappointed
Credit growth is slow and rate cuts have not
been passed to borrowers
We expect a gradual improvement in growth
as reforms are introduced
The government needs support in the upper
house to push through important reforms
51
50
49
48
Jan-10 Aug-10 Mar-11
Oct-11 May-12 Dec-12
Jul-13
Feb-14 Sep-14

Swedbank
19
China: Major challenges to rebalance the economy

China: Credit growth (y/y)
35
30
25
20
15
10
5
0
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Bank loans
Jul-13
Jan-14
Jul-14
Jan-15
China: Foreign trade (USD)

% y/y
70
60
50
40
30
20
10
0
-10
-20
-30
Jan-10 Aug-10 Mar-11 Oct-11 May-12 Dec-12 Jul-13 Feb-14 Sep-14
Trade Balance (total, annual rate)
Total loans
Exports, % y/y, 3MA
Billions
500
400
300
200
Growth target at 7% for 2015

Broad economic weakness
House prices are falling
Credit growth decelerates
Tighter fiscal stance as local governments
face borrowing restrictions
Growth will be driven by economic stimulus,
net exports and low oil prices
Risks are (as usual) big for a disorderly
adjustment but China still has large reserves
to use, if needed
A devaluation of the Renminbi is highly
unlikely as long as exports are growing
and the volume of corporate bond
maturing in 2015 is record high
100
Imports, % y/y, 3MA

Swedbank
20
Sweden
Swedbank
Sweden: Domestic demand remains the main engine for

growth
Sweden: Contribution to growth (%-points of GDP)

4,0
2,3
3,5
2,6
3,2
3,0
Public cons
2,5
2,0
1,5
Foreign balance
1,3
Stockbuilding
1,0
Gross fixed investment
0,5
Private cons
0,0
GDP (cal. adj.)
-0,5
-1,0
-1,5
2013
2014
2015f
2016f
Sources: Statistics Sweden and Swedbank forecasts.
Swedbank
We expect the household economy to

remain strong and consumption to be the
main engine of growth in 2015. Next year,
tax increases, higher inflation, and, to some
extent, amortisation requirements will
constrain purchasing power.
Higher investment growth, in 2015 through
rising housing investments, in 2016 through
business investments. Economic policy,
however, creates uncertainty that can
compromise corporate investment plans.
Moderately unit labour cost (ULC) and a
weaker exchange rate will support Swedish
exports during the forecast period and partly
offset the decline in market share.
22
Solid development for the household sector

Sweden: Disposable income and consumption
18,0
16,0
14,0
12,0
10,0
8,0
6,0
4,0
2,0
0,0
6,0
5,0
9000
8000
7000
4,0
6000
3,0
5000
2,0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015f
Disposable income (real change in %, RHS)
Consumption (real change in %, RHS)
Savings ratio
Interest rate costs (% of disp.inc)
Source: Swedbank
Sweden: Households financial wealth and debt
4000
3000
1,0
2000
0,0
1000
0
Source: Swedbank
Financial net wealth incl. NPISH
Debt total
Solid increase in disposable income this year, but higher taxes and rising inflation will dampen
the growth rate in 2016
Amortization Requirements and political uncertainties contributes to a persistent high savings
ratio during the forecast period
Households have a strong balance sheet at the aggregate level
Swedbank
23
Amortization requirement takes effect

Sweden: Interest & debt service ratio in LTV
ranges, 2014, new loans
Sweden: Amortization in LTV ranges (%), new

loans, 2014
100
10
80
60
40
20
2
0
0
0-25
25-50
50-70
70-85
above 85
15
15
Interest ratio
Debt service ratio
10
10
0-25
25-50
50-70
70-85
Note: Shows interest rate payments as well as the sum of
interest rate payments and amortization as a share of
disposable income.
The debt service ratio refers to present amortization plans.
Share that amortize

Share of debt (RHS)
Share of disposable income (RHS)
Source: FSA
above 85
Source: FSA
Sweden: Houshold debt & interest rate costs

4000
100
Households amortizing at a higher rate, but it

remains a part to fully meet the amortization
requirement
Both interest and debt service ratio will

rise, which dampens other consumption. Due to
our calculations costs will increase by 9 16 bn
SEK, corresponding to 0.5 0.9 percent of
household consumption.
Monetary policy keeps interest expenses in check

until next year
95
3500
90
85
3000
80
75
2500
70
65
2000
60
55
1500
Jan-07 Apr-08
50
Jul-09 Oct-10 Jan-12 Apr-13 Jul-14 Oct-15
Debt, bn SEK
Interest rate costs, bn SEK
Source: Statistics Sweden

Swedbank
24
Strong consumption this year but weaker in 2016

Sweden: Consumption on class of goods
Sweden: Retail sales & household expectations
15
10
5
50
40
30
0
2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1
-5
20
10
-10
-10
-15
0
2007
-1
-20
-2
Goods
Durable goods
Services
-20
2008
2009
2010
2011
2012
2013
2014
2015 -30
-40
Retail Sales (y/y)
Swedens economy over the next 12 mths (RHS)
Low interest rates and strong housing completions boosts consumption this year
Amortization Requirements, higher taxes and fragile "sentiment" dampen consumption of
durable goods, mainly next year
Swedbank
25
Broader growth in investments

Sweden: Investment in different sectors, %
25
20
15
10
5
0
2011
2012
2013
2014
2015
2016
-5
-10
-15
Total
Business, excl housing
Housing
Public
Sweden: Contribution to investment growth, %

10
Continued growth in real estate investments

but will decelerate in 2016 due to bas effects
and supply restrictions
Public investments speeds up driven by the
government measures in infrastructure and
from municipalities
Low interest rates, lower increases in unit
labour costs, low oil and higher export
demand raising investments in the business
sector
5
0
-5
-10
-15
2008
2009
2010
Machinery/Inventories
Investments that are intangible
2011
2012
2013
2014
Building excl. housing
Housing

Swedbank
26
Higher export growth as export demand in EMU recovers

Sweden: Export, market growth and market shares
8
6
4
2
0
2011
2012
2013
2014
2015
2016
-2
-4
-6
Market shares
World market growth
Export, %
Sweden: Export volume on class of goods, % change

16
14
12
10
8
6
4
2
0
-2
-4
2014
Export recovery during 2014 on serveral

markets but still sluggish for investment
goods
Higher expected market growth in EMU
(40% of Swedish export) in 2015/16,
favourable conditions for a stronger export
of goods.
Modest unit labour cost increases and
weaker krona
Average 2010-2013

Swedbank
27
Labour market improves but unemployment remains

stubbornly high
Sweden: Employment, labour force & unemployment

5 400
Swedbank estimate
Riksbank estimate
5 200
10,0
Labor force
9,5
9,0
Unemployment rate (%)
8,5
5 000
8,0
4 800
7,5
7,0
4 600
4 400
Underlying development positive

Labour force growth continues to surprise
Unemployment decrease only gradually
6,5
Employment
6,0
5,5
4 200
5,0
Sources: Statistics Sweden, Swedbank and the Riksbank
Swedbank
28
Record population growth

Sweden: Population growth and contribution from age groups
1,2%
10 000 000
1,0%
9 500 000
0,8%
0,6%
9 000 000
0,4%
0,2%
8 500 000
0,0%
-0,2%
8 000 000
-0,4%
-0,6%
Sweden population increased by 100 000

last year and is approaching 10 million
3/4 net immigration and net birth
Dependency ratio has stabilized in the short
term
7 500 000
0-14y (%)
Chg population (%)
15-64y (%)
Population (RHS)
65+y (%)
Sweden: Share 15-64 years in total pop., among foreign and

domestic born
79%
77%
For. born
75%
73%
66%
64%
Total
62%
60%
2000
Dom. born
2002
2004
2006
2008
2010
2012
2014

Swedbank
29
Upcoming wage negotiations increasingly in focus

Sweden: Economic Forecasts, Prospera
4
3,5
3,5
2,5
2,5
1,5
1,5
Wage increase expectations, Year 2
Inflation expectations, Year 5
Wage increase expectations, Year 1
Sweden: Wages
7,0
6,0
Wage growth has been moderate for several

years
Difficult wage negotiations is expected
Wage expectations are falling
Moderate wage increases in the years
ahead
Labour cots will rise next year on abolishing
youth discount
Hourly wages: 2.9% this year and 3.2 %
next year
5,0
4,0
3,0
2,0
1,0
0,0
Total pay growth
Collective bargaining agreement
"Wage drift"
Source: Swedish National Mediation Office

Swedbank
30
Higher inflation
Sweden: Inflation development

3,50%
3,00%
2,50%
2,00%
1,50%
1,00%
0,50%
0,00%
-0,50%
-1,00%
2010
2011
2012
CPI
2013
Swedbank
2014
2015
CPIF
2016
Swedbank
Inflation has bottomed out and CPIF

increase to 1.0% in 2015 partly due to bas
effects
In 2016 CPIF increase to 2% driven by
higher energy prices and tax increases
The government tax increases on fuels and
lower tax reduction for building/construction
will raise the CPI by 0.35 percentage points
in 2016
Positive contribution to CPI in 2016 when
the interest rates gradually start to increase
Sources: Swedbank and Statistics Sweden
Swedbank
31
The Riksbank implements additional easing in the

spring
Sweden: Repo rate path
The Riksbank cuts the repo rate to 0.5

percent
Additional purchases of government bonds
2,50
2,00
1,50
1,00
0,50
0,00
2010-11-15
-0,50
2012-11-15
2014-11-15
2016-11-15
-1,00
Outcome
Riksbank (Mar)
Swedbank (Apr)
Riba/FRA (Apr 20)
Note: The Riksbank repo rate path is an estimation from the press release
Sources: Swedbank, Riksbanken and Bloomberg
Swedbank
SEK 50 billion
Covered bonds and bonds from local authorities are
plausible
Loans to small and medium-sized

enterprises (possibility)
FX-interventions (possibility)
Repo rate raised the second half of 2016 in
two steps to 0 percent (September and
December)
32
Neutral fiscal policy
Neutral to marginally negative effect on GDP 2015 och 2016

SEK 8 bn 2015 och 20 bn 2016 in fully financed reforms
Scope for more reforms in the fall; gasoline tax, defense, jobs, education
Reforms in Spring Budget Bill
SEK bn 2016
Effect on GDP 2016
Jobs and competitiveness
+5,5
Higher private and public consumption
School
+2,6
Higher public consumption
Health care and elderly care, unemployment

benefits
+6,5
Environment
+2,0
Other (mainly to municipalities)
+3,4
Social contribution fees for people <26
-15,8
Lower employment and private consumption
Other
-3,9
Lower private consumption
Swedbank
33
Negative policy rate - unique possibility for fiscal

policy
Expansive fiscal policy can contribute to strengthen growth with a positive multiplier when
policy rates have reached the zero lower bound (see e.g., Blanchard och Leigh 2013,
Eichengreen and ORourke 2012)
Ineffective fiscal policy?

In countries with a government debt over 90 % (Reinhardt och Rogoff 2010, 2012)
Multiplier effect diminshes witha government debt over 70% (Becker 2006)
Swedish government debt 2015 40,9%

Real interest rate 10-year government bonds about -1,7%
Swedbank
34
Fiscal policy: There will be more

SEK 28 bn in tax increases planned and more reforms to be announced
Revenue increases SEK 20 bn
Jobs and competitiveness

Health care and elderly care, unemployment benefits
Other (mainly municipalities)
Other
Swedbank
Expenses SEK 20 bn
School
Environment
Social contribution fees
35
Relativ inflation is key to FX outlook
Usually, FX is not a tool/target for central

banks that are inflation targeting
However, FX is crucial now due to:
Currencies are a zero sum game, in the

past Fed and BoE lowered their
currencies
Inflation outlook in the short term is driven
by base effects, energy and currencies:
Slowly upwards: Sweden and the Eurozone

Unchanged: US and Norge
Down: UK
Note that central banks view the falling oil

price differently.
Swedbank
Global disinflation processes in the light of the debt

crisis and doubled capacity in the world economy
since 1990
Global policy rates are at zero and monetary
policies have to act with QE and indirectly against
FX
Fed , ECB and Norges bank disregard it

Riksbanken and ECB assume that it affects
inflation expectations and thereby emphasis it
36
EURUSD close to parity this year before Fed lifts-off.
Labour costs in the US start increasing as the labour market continues to improve
Strong USD/low oil prices support limited rate hiked by Fed
Expectations on Fed is currently only 25 bp hike in December and Fed funds around 1.00 % Dec
16.
Swedbank
37
EURUSD flows still negative
Current account gives support for EURUSD but

ECB buying 50bn government bonds gives FX outflows. Very little EUR gov. bond supply
and few sellers
EUR purchase of shares are hedged. Flows are held back by Greece
EM has much debt denominated in dollars, has to hedge
Middle east and China have less USD to rebalance against the EUR and avoid EUR due to low
yield
Swedbank
38
Nordic area: A pick up since last winter
Swedbank
Norway: Slowdown set to continue

Denmark: A successful defence of the
currency peg
Finland: Less clouds, but still rainy
39
Norway: Slowdown set to continue

Norway: GDP outcome and forecast (%)
8,0
6,0
4,0
Outlook has weakened further...
2,0
0,0
-2,0
...but unemployment remains low
-4,0
2002
2005
2008
2011
Norges Bank's forecast

Network survey
2014
GDP Mainland
Network forecast
Sources: Reuters EcoWin, Swedbank and Norges Bank.
Norway: Unemployment in %
4,5
4,0
3,5
3,0
2,5
2,0
1,5
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Norges Bank's forecast
Unemployment (survey)
Unemployment (registred)
Registered (NAV) unemployment has risen more slowly

than expected
Labour force survey (AKU) has reported an upswing,
but remains volatile
Norges Bank set to cut policy rate
5,0
Regional network projects growth below 1%

Oil prices remain low, investments falling
Wage growth slows down to below 3% this year
Kept policy rate unchanged at 1.25% in March for fear

of fuelling strong house price growth
Rate path projection implies cut to 1% in Q2, and
downside bias thereafter
We see clear downside risks and expect rate
eventually bottom at 0.5% next year
We reduce our growth projections to

1.2-1.4% in 2015/2016, with risks on
downside
We expect NOK to remain weak
Sources: Reuters EcoWin and Swedbank.

Swedbank
40
Finland: Less clouds, but still rainy

Finland: Industrial output and services' sector turnover, YoY %
12
8
Net exports main contributor to growth in

2015
0
-4
Supply side of the economy is primarily

supported by growth in the service sector
-8
2010
2011
2012
2013
Industrial output
2014
2015
Sources: Statistics Finland and Swedbank
Finland: GDP and its transactions, YoY %
8
6
3
2.6
0.1
0.9
0
-1.5
-4
-1.3
-6
-8
2010
2011
2012
GDP
Exports
2013
2014
2015f
Private consumption
2016f
Investments
Productivity growth has been very sluggish, and

working-age population and investments have
decreased several years in a row.
Investments will have positive growth

numbers only in 2016
Private consumption grows marginally in
2015, primarily supported by low energy
prices
-0.1
-2
Industrial sector output is still in the negative territory
Finlands economic growth potential has

decreased
Services' turnover
Although, substantial negative impact of the Russian

economic crisis, average foreign demand has improved
lately
Household savings have been negative for 2 years in a

row, which inhibits more robust pick-up in consumption
Public sector has to implement even more

strict austerity policies as the budget deficit
fell below the 3% limit last year
Sources: Statistics Finland and Swedbank

Swedbank
41
Denmark: A successful defence of the currency peg

Denmark: Monetary policy rates (%)
1,00
0,80
0,60
0,40
0,20
0,00
-0,20
-0,40
-0,60
-0,80
-1,00
2012
2013
Certificates of deposit rate

Current-account rate
2014
Aggressive reductions of policy rates, and

large intervention in the currency markets
have kept the krone well within bounds
2015
Discount rate
Lending rate
Source: Danmarks Nationalbank
Denmark: Kroner per euro
Denmark: Foreign-exchange reserve (DKK billion)
7,7 kr
800
700
7,6 kr
600
7,5 kr
500
400
7,4 kr
300
7,3 kr
200
100
7,2 kr
0
2012
2013

Swedbank
2014
2015
Market rate
Central rate
Fluctuation limits (+/-2.25 per cent)

42
Denmark: Competitiveness and labour market improve

Denmark: Competitiveness and exports
106
60000
104
55000
102
50000
100
45000
98
40000
96
94
35000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
REER (ULC)
Export (m Dkk, RHS)
Sources:BIS and Statistics Denmark.
Exports improves on the back of improved

competitiveness
Employment and employment rate recover,
while unemployment rate declines from
elevated levels
We expect growth to continue to increase at
a moderate rate
Denmark: Labour market developments (%)

8
79
78
77
76
75
-2
74
-4
73
-6
Mar-05
72
Jun-06
Sep-07
Employment growth
Dec-08
Mar-10
Jun-11
Unemployment rate
Sep-12
Dec-13
Employment rate (RHS)
Source: Statistics Denmark

Swedbank
43
The Baltics
Estonia: More opportunities for growth
Latvia: Consumers driving growth
Lithuania: Wear your long johns until the
summer
Swedbank
44
Estonia: More opportunities for growth

Estonia: Contributions to GDP growth, pp
8
6
4.7
4
2.1
2.1
2.8
Inventories
1.6
Net exports
Investments
GDP real growth in 2015 and 2016 revised

marginally upwards
Manufacturing sector turnover and export growth
is expected to decelerate this year
Government
Households
-2
GDP growth, %
-4
-6
Uncertainty among enterprises inhibit the growth of

business sector investments
2012
2013
2014
2015f
2016f
Sources: Statistics Estonia and Swedbank
Estonia: Labour market indicators and inflation

12%
10.0%
10%
8.6%
7.4%
8%
7.0%
6.7%
6%
Unemployment rate
Consumer prices,
YoY
4%
Net wage real

growth, YoY
2%
Negative effect from the economic crisis in Russia, but

Estonian enterprises have increased their exports to several
other markets
Foreign demand stronger than we forecast in January SEO
Faster growth of government investments
Labour market is expected to tighten
Wage growth remains strong
Working-age population is decreasing
Unemployment will drop further
Households real purchasing power will grow markedly and

feed private consumption this year
Consumer prices are expected to start rising (yoy)

in the 2H of this year
Energy and food prices will start to increase
USD denominated imports become more costly
In 2016 another round of excise tax hikes
0%
2012
2013
2014
2015f
2016f
-2%
Sources: Statistics Estonia and Swedbank
Swedbank
45
Latvia: Consumers driving growth

Latvia: GDP annual growth, %
32
12
24
GDP (RHS)
16
Household
consumption
Gross fixed
capital formation
-8
-3
2013
Latvia: Annual growth of retail, manufacturing, and

wages (%) and economic sentiment
30
Imports
15f 16f
2014
GDP to grow by 1.9% in 15 and 3.5% in 16
Exports
-6
-16
2012
Source: CSBL
The government will not be able to reduce

tax burden next year
120
Real net wage
15
110
Manufacturing
output
100
Retail trade
turnover
-15
-30
2010
2011
Source: CSBL
Swedbank
90
80
2012
2013
2014
2015
Econ. sentiment
index (RHS)
We keep the forecast unchanged growth mostly

consumption driven this year, owing to continued wage
growth and weak inflation. Net export contribution to
turn negative.
Exports and investments this year hindered by
geopolitical uncertainty, recession in Russia, and
slowness of administrative process for EU funds, but to
pick up next year, as the global economy speeds up
and quantitative easing supports recovery in the euro
area.
With revenues falling short of the plan due to slower

growth, the government will not be able to cut personal
income tax in 2016 by 1pp (as currently put in the law);
instead it will continue with raising smaller taxes, e.g.,
excise, and reducing shadow economy.
Labour market outlook largely intact flat employment
in 2015 due to rather weak growth and focus on
productivity; job creation to resume in 2016. Yet, lower
net wage growth in 2016 due to no PIT cut.
A bit higher CPI inflation in 2015 (0.8%) than in
January outlook due to excise tax hike and weaker
euro. Yet, robust purchasing power growth to persist.
46
Lithuania: Wearing long johns until the summer

Lithuania: Contributions to GDP growth, pp
8
6,1
3,8
4
First half of 2015 looks dismal
2,9
3,3
1,6
3,5
2,3
0
-2
-4
2010
2011
2012
Household consumption
Investment (excl.invent.)
Net export
2013
2014
2015f
2016f
Government consumption
Inventories
GDP growth, %
Sources: Statistics Lithuania and Swedbank forecasts.
Lithuania: Exports of goods, annual growth
Growth is likely to return to its trend in 2016
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
2012
2013
2014
2015
Exports of goods to Russia
Exports of goods
Exports of goods produced in Lithuania (w/o mineral pr.)
Exports of goods produced in Lithuania (w/o mineral pr. & Russia)
Source: Statistics Lithuania.
Swedbank
Exports in January-February were 6.9% smaller than a

year ago. This was mainly due to Russias embargo
and recession exports to it have shrunk by 34.7%.
Retail trade growth has also weakened annual
growth in January-February was 2.7%, down from a
brisk 8.2% in December. Part of this is cautiousness
after the euro adoption, thus household consumption is
likely to recover later this year.
Consumption will be supported by rising wages and
deflation weve revised our CPI forecast to -0.5%.
Recovering euro zone and more stable Russia (and a
likely end of embargo) will support export growth,
which expected to expand by 7%
Parliament elections in autumn will encourage
government to increase public sector wages. We also
forecast that non-taxable income threshold will be
increased by 10%, further boosting household
consumption.
Unemployment will drop to 8.5%, but mainly due to
shrinking labor force; employment growth is likely to
remain meagre
47
Appendix: Key economic indicators &

national accounts for Swedbanks
home markets
Swedbank
Sweden: Key economic indicators

Key Economic indicators, 2013-2016 1/
Swedbank's GDP Forecast - Sweden

2013
2014
2015f
2016f
Real GDP (calendar adjusted)
1,3
2,3
2,6
3,2
Industrial production
-0,7
-1,3
1,8
4,2
CPI index, average
0,0
-0,2
0,2
1,9
CPI, end of period
0,1
-0,3
1,0
2,4
CPIF, average 2/
0,9
0,5
1,0
2,0
CPIF, end of period
0,8
0,5
1,5
2,1
Labour force (15-74)
1,1
1,3
1,3
0,9
Unemployment rate (15-74), % of labor force
8,0
7,9
7,8
7,6
Employment (15-74)
1,0
1,4
1,4
1,1
Nominal hourly w age w hole economy, average
2,6
3,0
3,0
3,3
Savings ratio (households), %

Real disposable income (households)
15,6
2,1
16,0
2,8
15,6
2,8
15,7
2,5
Current account balance, % of GDP
6,9
5,8
6,1
6,1
General government budget balance, % of GDP 3/
-1,4
-2,1
-1,7
-1,2
General government debt, % of GDP 4/
38,6
40,6
40,5
39,7
1/ A nnual percentage gro wth, unless o therwise indicated.
Changes in volum e, %
2013
2014
2015f
2016f
Households' consumption expenditure

1,9
2,4
(2,4)
3,2
(2,7)
2,5
(2,3)
Government consumption expenditure

0,7
1,9
(1,4)
2,2
(2,0)
2,5
(2,1)
Gross fixed capital formation
-0,4
6,5
(4,6)
4,5
(5,3)
6,3
(6,3)
private, excl. housing
-1,6
4,6
(0,8)
3,3
(3,4)
6,2
(6,7)
public
1,7
1,7
(5,1)
0,4
(4,8)
4,6
(4,3)
housing
2,1
20,3 (19,3) 13,1 (12,4)
7,9
(6,8)
Change in inventories
1/
0,0
0,2
(0,3)
-0,1
(-0,0)
0,0
(0,0)
Exports, goods and services
-0,2
3,3
(2,1)
4,5
(3,5)
5,4
(5,2)
Imports, goods and services
-0,7
6,5
(5,1)
5,5
(5,3)
5,7
(5,5)
GDP
1,2
2,1
(1,8)
2,8
(2,4)
3,4
(3,2)
GDP, calendar adjusted
1,3
2,3
(1,9)
2,6
(2,2)
3,2
(2,9)
Domestic demand
Net exports 1/
1/
1/ Co ntributio n to GDP gro wth.

January 2015 fo recast in parenthesis.
1,0
3,0
(2,5)
3,1
(3,0)
3,3
(3,1)
0,2
-1,1
(-1,0)
-0,2
(-0,6)
0,1
(0,1)
So urces: Statistics Sweden and Swedbank
2/ CP I with fixed interest rates.
3/ A s measured by general go vernment net lending.
4/ A cco rding to the M aastricht criterio n.

Sources: Statistics Sweden and Swedbank
Interest and exchange rate assumptions

Outcom e Forecast
2015 2015 2015 2016 2016
17-apr 30 Jun 31 Dec 30 Jun 31 Dec
Interest rates (%)
Policy rate
-0,25
-0,50
-0,50
-0,50
0,00
10-yr. gvt bond
0,24
0,20
0,60
1,10
1,70
Exchange rates
EUR/SEK
9,3
9,5
9,3
9,0
8,9
8,6
9,2
9,2
9,5
9,1
114,3
116,5
114,9
113,0
113,3
USD/SEK
KIX (SEK)
1/
1/ To tal co mpetitiveness weights. Trade-weighted exchange rate index fo r SEK.

So urces: Reuters Eco win and Swedbank
Swedbank
49
Estonia: Key economic indicators

ESTONIA: Key economic indicators, 2013-2016 1/
2013
1,6
Real GDP grow th, %
2014
2,1
2015f
2,1
(2,0)
2016f
2,8
(2,7)
3,8
4,6
4,7
(4,2)
3,6
(3,6)
2,8
2,3
2,0
(1,0)
2,0
(1,0)
2,3
-2,8
2,0
(0,6)
3,5
(3,5)
Exports of goods and services
2,4
2,6
2,1
(1,5)
4,0
(3,7)
Imports of goods and services
3,3
2,7
3,1
(2,1)
4,6
(4,2)
2,8
-0,1
0,1
(0,3)
2,7
(2,6)
8,6
7,4
7,0
(7,3)
6,7
(7,2)
4,6
4,2
7,0
(6,5)
3,0
(3,3)
18,7
19,5
20,5
(20,4)
21,7
(21,7)
Consumer price grow th, %

Unemployment rate, %
2/
Real net monthly w age grow th, %

Nominal GDP, billion euro
Exports of goods and services (nominal), % grow th
3,5
2,4
1,9
(1,5)
4,5
(4,2)
Imports of goods and services (nominal), % grow th
2,9
1,1
2,1
(1,9)
5,1
(4,7)
Balance of goods and services, % of GDP
1,4
2,5
2,3
(2,4)
1,9
(2,2)
-1,1
-0,1
-0,3
(-0.9)
-1,0
(-1.3)
Current and capital account balance, % of GDP
0,6
0,6
0,8
(-0.4)
-0,4
(-1.0)
FDI inflow , % of GDP
3,6
6,1
4,9
(3,9)
4,6
(3,7)
Gross external debt, % of GDP
93,5
97,2
93,0
(87,2)
88,8
(83,4)
-0,5
0,6
-0,5
(-0.4)
-0,5
(-0.2)
General government debt, % of GDP
10,1
10,6
10,2
(9,8)
10,0
(9,5)
1/ January 2015 f orecast in parenthesis

2/ According to Labour f orce surv ey
3/ According to Maastricht criterion
Key economic indicators, 2013-2016
Sources: Statistics Estonia, Bank of Estonia and Swedbank

1/
2013
2014
Real GDP grow th, %
1,6
2,1
2,1
2015f
(2,0)
2,8
2016f
(2,7)
2,8
-0,1
0,1
(0,3)
2,7
(2,6)
Unemployment rate, % 2/
8,6
7,4
7,0
(7,3)
6,7
(7,2)
4,6
4,2
7,0
(6,5)
3,0
(3,3)
0,6
0,6
0,8
(-0.4)
-0,4
(-1.0)
-0,5
0,6
-0,5
(-0.4)
-0,5
(-0.2)

2/ According to Labour f orce surv ey
3/ According to Maastricht criterion
Swedbank
Sources: Statistics Estonia, Bank of Estonia, Swedbank.
50
Latvia: Key economic indicators

LATVIA: Key economic indicators, 2013-2016 1/
Real GDP grow th, %
1/
2/
3/
2013
4,2
6,2
2,9
-5,2
1,4
-0,2
0,0
11,9
5,7
23,2
2,2
0,9
-3,3
-2,3
0,1
2,9
131,3
-0,9
38,2
2015f
1,9
(1,9)
3,5
(3,5)
0,6
(0,7)
-0,5
(-0,5)
1,4
(1,0)
2,3
(2,2)
0,8
(0,5)
10,2
(10,2)
5,2
(5,5)
24,8
(24,9)
1,2
(1,1)
1,5
(1,6)
-3,0
(-3,0)
-2,9
(-2,6)
0,2
(-0,2)
2,4
(2,4)
135,9
(136,9)
-1,6
(-1,5)
39,3
(39,4)
2014
2,4
2,3
3,4
1,3
2,2
1,6
0,6
10,8
7,9
24,1
1,8
1,2
-2,9
-3,1
-0,1
1,5
138,6
-1,6
40,3
January 2015 f orecast in parenthesis.

According to Labour f orce surv ey .
According to Maastricht criterion.
2016f
3,5
(3,5)
4,0
(4,0)
0,5
(0,5)
10,0
(10,0)
4,0
(4,0)
7,0
(7,0)
2,7
(2,5)
9,2
(9,2)
2,9
(3,9)
26,5
(26,4)
5,9
(5,9)
8,6
(8,9)
-4,5
(-4,7)
-4,4
(-4,3)
-1,9
(-2,8)
3,0
(3,0)
132,2
(133,7)
-1,2
(-1,2)
38,3
(38,5)
Sources: CSBL and Swedbank.

1/
2013
Real GDP grow th, %
4,2
2014
2,4
2015f
1,9
2016f
(1,9)
3,5
(3,5)
0,0
0,6
0,8
(0,5)
2,7
(2,5)
11,9
10,8
10,2
(10,2)
9,2
(9,2)
5,7
7,9
5,2
(5,5)
2,9
(3,9)
-2,3
-3,1
-2,9
(-2,6)
-4,4
(-4,3)
-0,9
-1,6
-1,6
(-1,5)
-1,2
(-1,2)
2/
1/ January 2015 f orecast in parenthesis.

2/ According to Labour f orce surv ey .
3/ According to Maastricht criterion.
Swedbank
Sources: CSBL and Swedbank.
51
Lithuania: Key economic indicators

LITHUANIA: Key economic indicators, 2013-2016 1/
2013
2014
3,3
2,9
2,3
(2.3)
3,5
(3.5)
4,2
5,6
4,3
(4.0)
4,5
(4.7)
1,8
1,3
2,0
(2.5)
2,5
(2.5)
Real GDP grow th, %
2015f
2016f
7,0
8,0
2,0
(2.0)
8,0
(8.0)
9,4
3,4
-2,5
(0.0)
7,0
(7.0)
9,0
5,4
1,0
(2.6)
8,4
(8.5)

1,0
0,1
-0,5
(0.7)
2,5
(2.0)
11,8
10,7
9,7
(9.7)
8,5
(8.5)
3,8
4,8
5,4
(4.2)
4,0
(4.5)
35,0
36,3
37,1
(37.7)
39,3
(39.7)
8,0
1,0
-3,0
(-2.5)
9,0
(8.0)
7,5
2,1
-1,5
(-0.5)
10,8
(10.0)
1,3
0,1
-1,1
(-1.2)
-2,5
(-2.7)
1,6
0,1
-1,6
(-1.7)
-3,0
(-3.2)
4,6
2,9
1,2
(0.9)
0,0
(-0.7)
1,5
0,8
1,0
(1.5)
1,5
(2.0)

69,8
70,0
70,1
(68.2)
67,5
(65.8)
-2,6
-1,3
-1,6
(-1.6)
-1,0
(-1.0)
39,0
41,1
42,1
(42.6)
37,5
(38.2)

Sources: Statistics Lithuania, Bank of

Lithuania and Swedbank.
1/
2013
2014
2015f
2016f
Real GDP grow th, %
3,3
2,9
2,3
(2.3)
3,5
(3.5)
1,0
0,1
-0,5
(0.7)
2,5
(2.0)
11,8
10,7
9,7
(9.7)
8,5
(8.5)
3,8
4,8
5,4
(4.2)
4,0
(4.5)
1,6
0,1
-1,6
(-1.7)
-3,0
(-3.2)
-2,6
-1,3
-1,6
(-1.6)
-1,0
(-1.0)
2/

Swedbank
Sources: Statistics Lithuania,

Bank of Lithuania and Swedbank.
52
Contact information
Macro Research
Jerk Matero
Olof Manner
Magnus Alvesson
Martin Bolander
Andrejs Semjonovs
olof.manner@swedbank.se
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Strategy
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anna.breman@swedbank.se
liis.elmik@swedbank.ee
Anders Eklf
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Senior Economist
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anders.eklof@swedbank.se
+370 5258 22 37
+46 (0)8 700 91 42
+372 888 72 06
+46 (0)72 53 23 533
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+46 (0)8 700 91 38
Mrti Kazks
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Teele Aksalu
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teele.aksalu@swedbank.ee
Deputy Group Chief Economist, Chief Economist LV
Economist
Economist
+371 6744 58 59
+46 (0)8 700 92 97
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Swedbank
53
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Swedbank Economic Outlook Update

Budding spring with spells of night frost

3. US: A rebound that faded

Mature economies will provide stability in

Emerging economies will face increased

Sweden will have adapt to ECB

Global outlook: The global recovery is propped up by

Pick up in mature economies despite some

Emerging economies in between energy

Risks are evenly balanced;

Risks to the forecast (prob. in %)

Downside risks are mainly coming from an

Global Outlook cont.: Monetary policy tensions spread

We expect Federal Reserve to raise in

Riksbank will cut as will Norges Bank but

Interest rate differentials and exchange

Source: Swedbank's forecasts

Interest rate diff. USA vs EMU

Sources: Reuters EcoWin and Swedbank

Global Outlook: Tables

1/ January 2015 f orecasts in parenthesis.

Sources: IMF and Swedbank.

Interest and exchange rate assumptions, %

European Central Bank

Governm ent bond rates

Interest and exchange rate assumptions

10-yr. gvt bond

So urces: Reuters Eco win and Swedbank.

1/ To tal co mpetitiveness weights. Trade-weighted exchange rate index fo r SEK.

US: A rebound that faded

Growth declined in the fourth quarter of

Job creation dropped significantly in the first

Source: Reuters EcoWin

US: Nonfarm payrolls

Source: Reuters EcoWin

US: Balance sheets positioned for a pick up

Household Net Worth (RHS)

US: Demand, deviation from trend

Households are saving, debt levels are

Mid-way in the business cycle according to

Oil price decline boosts growth and reduces inflation

Low oil price in particular beneficial to the

US: Core inflation and wages (%)

Slack in labour market will hold back wage

Average hourly earnings

Source: Reuters Ecowin

US: Solid expansion and tempered policy tightening

Despite revising down growth to 2.9% (from

We stick to our view that Federal Reserve

FOMC median end-year forecast of target

2017 Long term

EMU: Recovery gaining momentum

Barometers have improved fast

Actual data have also improved

Sources: Reuters EcoWin and Swedbank

EMU: Composite PMI

German GDP growth picked up in Q4

Monetary stimulus will continue

PMIs have improved rapidly and now suggest

Exceptionally low interest rates

We revise up expected growth to 1.4-1.9%

Mostly on Germany and Spain, but most countries

UK: Politics in focus

Gross capital formation