Short-term relief but long-term risks

Sweden: Below-trend growth, rising unemployment and key rate pause
The world economy seems to have emerged from last year’s manufacturing slump. Growth is accelerating cautiously, but lingering political uncertainty and supply-side constraints are diminishing the power of the upturn. Central bank signals of low key interest rates for a lengthy period will provide support, but they also raise questions about long-term risks of debt build-up and spiralling asset prices. Fiscal policymakers can play an increased role, but because of rigid fiscal frameworks and weak government finances, the dose of stimulus will still be cautious. In Sweden, sentiment indicators point to weak or even falling GDP in late 2019 and early 2020, but a recovery in household consumpti ...