Sweden’s public finances will be hit by the turmoil roiling global markets and the gloomier prospects for world growth, the country’s finance minister said on Tuesday.Sweden’s economy registered record growth last year as it bounced back from the downturn and, unlike most of Europe, its public finances are in rude health.The economy has already started to cool this year, but the prospect of lower global demand due to the debt crisis in Europe and a weak recovery in the United States have raised fears of a sharper slowdown.“What we can see is that there will be a significant downgrade of (forecasts for) public finances,” Anders Borg told reporters.“If we previously believed that we would land somewhere just under a (fiscal) surplus of 2 per cent in 2012, now we are going to be nearer balance.”
Borg also repeated that the government would significantly cut its 2012 forecast for GDP growth.In April, the government forecast growth this year of 4.6 per cent and 3.8 per cent the following year.Borg did not say whether the government would go ahead with plans for a fifth round of income tax cuts, which it had pencilled in for next year.
“We have a difficult situation and it would be irresponsible to build economic policy on the idea that the situation will stabilise quickly,” he said. Money markets remain in a fragile state following the recent escalation in the euro zone debt crisis, although tensions have subsided over the last week following an injection of six-month ECB emergency funding and a decisive move by the central bank to stabilise markets by buying Italian and Spanish bonds.
From / Gulf Today