the swedish economy

8/13/2019 The Swedish Economy

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Number 1•2009

The Swedish economyStatistical perspective

From the contents:

Economic crunch boosts householdsavings..... page 3The gross domestic product (GDP) for the fourth quarter of 2008showed the largest decrease since the rst quarter of 1993. Bothexports and imports developed very unfavourably. The drop inhousehold consumption coupled with the continued increase ofdisposable income resulted in record high household savings.

......which cut Swedish GDP growth page 7Households’ disposable income developed positively last year.Nevertheless household consumption fell, resulting in an all-timehigh (since the 1960s) savings ratio. A remarkable increase occur-red during the fourth quarter of 2008 compared to the correspon-ding quarter one year earlier. The savings increase corresponds toa considerably lower consumption demand, thereby contributingto the fall of GDP by about one percentage point.

Statistics suggest a relativelywell-functioning credit market page 20The nancial crisis developed very quickly into a real economiccrisis which almost immediately had an impact on demand,investment and growth. The drop in Swedish GDP is an expres-sion of this. Paradoxically, however, the crisis is not reected asclearly in the nancial statistics. At an aggregate level, the effectson banks and corporate balance sheets are so far relatively small.



Table of contents

Summary ................................................................. 3International outlook ................................................ 4

Exports and imports ................................................. 5

Household savings ................................................... 7

Household consumption .......................................... 9

Government consumption .....................................11

Gross capital formation .......................................... 12

The business sector ................................................ 15

Labour market ........................................................ 17

Financial crisis as seen in statistics ......................... 20

The Swedish economy – published March 2009



Summary

Economic crunch boosts household savingsThe gross domestic product (GDP) for the fourth quarter of

2008 showed the largest decrease since the rst quarter of1993, compared to corresponding quarter of the previousyear. Both exports and imports developed very unfavoura-bly. The drop in household consumption coupled with thecontinued increase of disposable income resulted in recordhigh household savings. The rapid decline of inventoriesheld back GDP growth as well.

During the fourth quarter of 2008 gross domestic productwas 4.9 percent lower than the corresponding quarter of2007. Consequently, GDP for all of 2008 also went down.GDP fell by 0.2 percent, which was a far worse outcome

than predicted at the beginning of the year. However, thegure for the entire year is less informative than usual . Dueto the gradually deteriorating economy during 2008, the sta-tus of the economy at the end of the year was quite differentfrom the beginning. Compared to the third quarter, the de-cline of the seasonally adjusted GDP the fourth quarter was2.4 percent. Nevertheless, this gure must be treated withsome caution since seasonal adjustment works less wellwhen there are sharp uctuations in the economy.

The extremely poor GDP growth was mainly marked bya gradually weakening global demand. During the fourth

quarter when the nancial crisis started to affect the realeconomy in a more obvious way, exports of goods cameto a complete halt. Exports decreased by a full 10 percentcompared to the fourth quarter of 2007. This is the largestdrop since 1980, i.e. during the whole period for whichquarterly gures are available on foreign trade in the natio-nal accounts. The global nancial crisis has hit investmentactivity very seriously. This has affected the Swedish exportsespecially strongly, since exports to a large degree consistof investment goods. Exports of cars contributed the most tothe decline. Imports of goods were also down sharply but

not as much exports. As a result, net exports held back GDPgrowth.

Household consumption decreased by slightly more than3 percent. This was the rst downturn since 1993, with theexception of marginal decreases in the fourth quarter 2001and the third quarter of last year. This reduced consump-tion seems to stem from psychological reasons rather thanlower household income. Inuenced by the severe eco-nomic state, households have reduced their spending andhave started to act more cautiously. During the latter partof 2008, The Economic Tendency Survey, produced by the

Swedish National Institute of Economic Research, has poin-ted at much greater uncertainty among households aboutboth the economic situation in Sweden and the economy ofhouseholds. In the fourth quarter, the drop in consumption

as well as an increase of real household disposable incomeof slightly more than 1 percent resulted in an extremely

high household savings rate of 7.4 percent of disposableincome.

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08070605040302010099989796959493

Household savings ratePercentage of disposable income. Fourth quarter for each year

Data up to and including 2008Source: National accounts

Gross xed capital formation was comparatively stable andonly decreased by approximately 1 percent. There was acontinued changeover to investments nanced by leasing.In the fourth quarter a decrease of inventories could benoted and this contributed markedly to the contractionof GDP. A deteriorating economic situation often leads tolarger stocks of nished goods, which was also the case forthe manufacturing industry this time. Even stocks of inter-mediate goods increased. However, the lower productionlevel led to much smaller stocks of work in progress compa-red to the fourth quarter of 2007. In total, this had a strongnegative effect on GDP growth.

The lower global demand has to a large degree affected thepassenger car industry which constituted a large part of the

total drop in production in the manufacturing industry. Thechemical industry continued to perform reasonably well.Among service producers, value added has fallen the mostin the trade industry.

So far the lower economic activity has not affected employ-ment to any large extent. The previous strong employmentgrowth came to an end during 2008 and employment sho-wed signs of a decrease from the third to the fourth quarters.Unemployment also revealed an unfavourable tendencyand increased somewhat from the third to the fourth quarter,seasonally adjusted. Figures for January 2009 conrm these

tendencies. Notices of lay-offs increased sharply at the endof 2008 and this may affect employment and unemploy-ment with some delay.




International outlook

The world economy contractsTotal demand, illustrated by the trend in GDP, weakened

markedly during the rst quarters of 2008. This develop-ment was followed by a decrease in economic activity ina narrow group of countries in the third quarter and in awider group during the fourth quarter.

Earlier, there has been a recognisable chain of time lagsamong changes in economic activity over the world. Howe-ver, right now this does not manifest itself as clearly as it useto, since countries from several continents seem to expe-rience similar economic turns.

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Q 4 2008Q 3 2008Q 2 2008"Q 1 2008

GDP growth and inflation in the OECD countriesPercentage change from corresponding quarter

previous year

Source: OECDand Eurostat

Data up to and including fourth quarter 2008

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Inflation US

Inflation G7Inflation OECD – Europe

Inflation OECD – Total

GDP CPI

The drop in the United States GDP can mainly be explainedby reductions in investments and household consumption.The president’s plan Making Home Affordable, aiming atrenancing or modifying the mortgages of homeowners,may be considered a small ray of light in the Americaneconomy1.

Even Germany, the largest export market of Sweden, sho-wed signicant downturns in economic activity during thefourth quarter last year. Above all else, the exports contribu-ted to this development. However, while Swedish exportsto Germany continued to decrease, a general increase inGerman imports could be detected. This indicates that Swe-den is losing market shares in Germany. Contrary to mostother countries, Norway, the second largest trade partnerof Sweden, managed to retain its GDP-growth in the fourthquarter. Nevertheless, it is striking that among the OECD-countries only Japan reported a stronger fall in economic

activity than Sweden. Both in the European Union and inthe United States the economic activity in general contrac-ted more slowly than in Sweden.

When there is a decrease in overall demand, an adjustment

downwards in the prices of goods and services generallyfollows. A development like this also appears in the OECD-

countries during the end of 2008, when the growth in priceswas held back. The fourth quarter showed a growth inconsumer prices by 2 per cent on average compared withthe same period the year before, as opposed to the pace offour per cent during the beginning of last year. The growthin prices was lower in the G7 countries than in the OECDas a whole. Turkey followed the same ination pattern asmost other countries, but with the exception of beginningfrom a much higher level. On the other hand, Icelandstarted out with a growth in prices by 4 per cent that soaredup to 20 per cent towards the end of the year. This develop-ment clearly indicates that the Icelandic crisis is profound.The withheld demand has also led to heavy reductions inthe world market prices of crude oil. A lower level of oilprices may have favourable effects on both households andindustry.

As an effect of the general economic state, the developmenton the national labour markets continued to deteriorateduring the fourth quarter of 2008. However, this change isnormally slower than the change in GDP and appears witha time lag. Last December, 6.8 per cent of the labour forcein the OECD countries was unemployed. In Europe thisshare is somewhat more than one percentage point higher.Norway, South Korea and the Netherlands are superior inthis with unemployment rates as low as about 3 per cent.Not only are there few persons unemployed in the Nether-lands, but its labour market has not yet been particularly af-fected by the otherwise fully obvious economic downturn2.

Haugh et al (2009) have studied the macroeconomic con-sequences of nancial crises originating from the bankingsector3. Those crises have led to larger losses in produc-tion than general economic downturns. Furthermore, bothinvestments by rms and households (in houses) tend to

diminish more than proportionate. Exports have playedan important role in the recovery after these earlier crises,partly due to the depreciation of the currency. Given thishistorical background, the prevailing state of the worldeconomy could be considered troubled.

Contact persons: Eva Hagsten, 08-506 942 27 and Tomas Thorén, 08-506 941 46

1 http://www.nancialstability.gov/makinghomeaffordable/

2 The background information to this paragraph comes from the OECD

labour market statistics: http://stats.oecd.org/wbos/Index.aspx?QueryName=251&QueryType=View&Lang=en

3 David Haugh, Patrice Ollivaud och David Turner (2009) The Macr-oeconomic consequences of banking crises in OECD countries, OECDWorking Paper No 683, OECD, March.




Exports and imports

Drop in exports of goods reduced GDPThe international slowdown in the economy has hit invest-ments hard. As a consequence, Swedish exports have beenhit hard, since investment goods constitute a large part ofthe exports. Both exports and imports were down sharplyduring the fourth quarter, most notably as a result of thedrop in trade of goods. Foreign trade had a considerablynegative effect on GDP growth, because exports fell morethan imports. The large decrease of exports of goods to theUnited States in recent years is mainly caused by lowerexports of pharmaceuticals and passenger cars.

Swedish foreign trade continued downwards last yearbecause of a drop in international demand. Net exports in

the fourth quarter held back GDP growth by 1.3 percentagepoints. The reason was the sharp drop in exports of goodswhich amounted to slightly more than 10 percent com-pared to the corresponding quarter of 2007. At the sametime imports of goods also declined substantially, but at asomewhat slower rate than exports of goods. Trade in servi-ces gave no support as both exports and imports of serviceswere comparatively unchanged during the fourth quarter.However, trade in services, because of its better develop-ment than trade in goods, led to less of a downturn for totalexports and imports.

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Contribution to GDP growth from exportsPercentage points

Data up to and including fourth quarter 2008Source: National accounts

Exports,import adjusted

Net exports,unadjusted

The large negative effect on GDP growth is not unique.During 2007 net exports had almost the same, or evenlarger, effect on GDP growth during the rst as well as thethird and the fourth quarters. The negative effect from netexports during the fourth quarter of 2008 coincided withan even larger effect from both inventories and household

consumption, which led to the considerable drop in GDP.

According to alternative calculations of contributions toGDP growth, where the different items on the expenditureside of GDP have been adjusted for import contents, the

contribution to GDP growth by exports was –2.2 percentageunits. This was the rst time during the last ve years thatthe import-adjusted calculations showed a negative effectfrom exports, and the second time that contributions fromimport-adjusted exports were lower than exports not ad-justed for imports. It was also a considerably larger negativecontribution than from import adjusted change in invento-ries and household consumption. Import adjustment meansthat instead of calculating effects from net exports (whereimports on GDP growth are deducted from exports only) thetotal effect is distributed among the items on the expenditu-re side of GDP, according to their import content.

Exports dropped by 3.8 percent during the fourth quarter

compared to the previous quarter. This is a substantiallylower growth rate compared to the preceding two quarters,when GDP fell by about 1 percent. The decrease of importswas also larger, but the drop was a little more moderate or2.9 percent.

In spite of the large drop in the fourth quarter, exportsincreased somewhat for all of 2008. At the same time, im-ports increased more rapidly than exports and for 2008 netexports contributed –0.4 percentage points. The import-ad-justed contribution from exports was 0.1 percentage points.

Decline on all large export marketsBecause Swedish exports of goods rely heavily on invest-ment goods, Swedish exports have been hit more severelythan the exports of many other countries. Statistics onforeign trade of goods, measured in current prices, showthat exports of motor vehicles, metals and machinery andequipment have decreased for the fourth quarter, comparedto the corresponding quarter of 2007. Motor vehicles andmachinery are by far the two largest commodity groups inSwedish exports. Therefore the decline had a considerableeffect on total exports.

The drop in demand during the fourth quarter was verydistinct on all the large export markets. The decline of ex-ports to the United States, Denmark and Norway was mostvisible, while the drop was less to Germany and the UnitedKingdom. The drop on the German market seems to havespeeded up from the third to the fourth quarters.

The importance of the different export markets seems tohave been largely unaffected. Germany and Norway arestill the two largest destinations for Swedish exports. TheUnited States, which was the largest export market as recentas 2005, has lost much importance during recent years.

The demand for Swedish exports on the American markethas fallen more rapidly than on other large export markets.Exports show a very clear picture of concentration, andthe ve countries Germany, Norway, Denmark, UnitedKingdom and the United States constituted more than 40




percent of the Swedish export market for goods in 2008.

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Percentages of total exports of goods

Data up to and including 2008Source: Foreign trade statistiscs

Norway

United Kingdom

United StatesGermany

Denmark

Pharmaceuticals a large part of the rise andfall of exports to the United StatesThe fall from the top ranked destination country for Swe-dish exports for the United States took place at the sametime as the start of the slowdown of the American economya couple of years ago. However, the drop in demand forSwedish goods has mainly hit two commodity groups:pharmaceuticals and passenger cars. Since exports of goods

to the United States peaked in 2005, it was maintained in2006 by a sharp increase in exports of pharmaceuticals. In2007 the demand for Swedish pharmaceuticals decreasedsubstantially. This resulted in a lower level for exports ofpharmaceuticals, which coincided with a drop in the Swe-dish production of pharmaceuticals. The drop continuedduring the rst three quarters of 2008, compared to thecorresponding quarters of the preceding year. A recoverytook place during the fourth quarter of 2008 when exportsof pharmaceuticals counteracted the fall of the total exportsto the United States.

In 2007 and 2008, total annual exports to the US decreasedby SEK 22 billion – from more than SEK100 billion toslightly less than 80 billion per year. Pharmaceuticals ac-counted for 9 billion of the total of 22 billion. This meansthat the exports of pharmaceuticals to the United States fellby almost 50 percent in two years. Most of the decline oc-curred in 2007. However, the drop took place from a very

high level. In 2008 the drop of exports to the United Statescontinued, but mostly as a consequence of a very substan-tial drop in the exports of passenger cars.

Contact person: Tomas Thorén, 08-506 941 46

Contributions to GDP growthIn 2008 GDP growth was –0.2 percent, while growth for thefourth quarter was –4.8 percent (not calendar adjusted). Volume

growth for the different items on the expenditure side of GDPand their contributions to GDP growth can be seen in the tablebelow from 2007 to 2008, as well as for the fourth quarters ofboth years.

Contributions to GDP growth 2008

Volume growth, Contributions, percentage percent Traditional method Import adjusted

Q 4 2008 Q 4 2008 Q 4 2008

Househ. cons. –3.3 –0.2 –1.5 –0.1 –1.1 –0.3Govt. cons. 0.1 1.3 0.0 0.3 0.0 0.2Gross cap. form.–1.2 3.5 –0.2 0.7 –0.1 0.2Change in invent. . . –1.8 –0.7 –1.4 –0.5

Net exports . . –1.3 –0.4 . .Exports –7.2 1.7 –3.8 0.9 –2.2 0.1Imports –5.4 3.0 2.5 –1.3 . .

GDP –4.8 –0.2 –4.8 –0.2 –4.8 –0.2

The rst two contribution columns show the contributions fromthe different items on the expenditure side, calculated accordingto the traditional method, where corrections have been made ac-cording to the import content in different items. Demand withineach component relates to a larger or smaller share of importedgoods. By using the input-output tables for the year 2005, anadjustment can be made according to the import content indemand, and the contribution from Swedish production to GDP

growth can be calculated1

. The distribution of imports among thedifferent components results in a more accentuated contractiveeffect from exports, while the negative contributions from otheritems are moderate. This is because imports declined sharply andthus gave a positive contribution to GDP growth.

1 For more information about these calculation methods, see the Swe-dish economy – statistical perspective number 1 2007.

The modied calculation shows that the weak export has thelargest withholding effect on GDP growth. It contributes to almosthalf of the GDP decrease. The importance of household con-

sumption and change in inventories will be somewhat reducedaccording to this calculation method.

A corresponding calculation can also be done for GDP with theproduction approach. In this case the contributions to total valueadded from different industries are calculated. The result for thefourth quarter 2008 is shown in the table below.

The production of goods and of services had approximately thesame effect on GDP growth. For the entire year of 2008, it wasthe production of goods, and above all the manufacturing indu-stry, that held back GDP growth. The large effect from taxes onproduction for the fourth quarter is due to the sharp drop in hous-ehold consumption that affected the value added tax.

Contributions to GDP growth from different industries

Contributions, percentage pointsQ 4 2008

Value added production of goods –2.1 –0.4 – of which manufacturing industry –2.1 –0.6 – of which construction 0.0 0.1Value added production of services –2.2 0.2 – of which trade. hotels. restaurants –1.2 0.0Value added total –4.3 –0.2Taxes on production –0.6 –0.1Subsidies 0.0 0.1GDP –4.8 –0.2




Household savings

Increased household savings cut Swedish

GDP growthHouseholds’ disposable income developed positively lastyear. Nevertheless household consumption fell, resulting inan all-time high (since the 1960s) savings ratio. A remar-kable increase occurred during the fourth quarterof 2008compared with the corresponding quarter one year earlier.The savings increase corresponds to a considerably lowerconsumption demand, thereby contributing to the fall ofGDP by about one percentage point.

Increased salaries, lowered taxes and an improved netbalance of property income led to a 6 percent increase of

households’ disposable income in 2008 (at current prices).At the same time consumption diminished in absolutevalues. The savings ratio thus rose to almost 12 percent ofhouseholds’ disposable income, the highest level recordedin the statistics since the 1960s.

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08070605040302010099989796959493

Household savings ratePercent of disposable income


The household sector’s choice between savings and con-

sumption has a great impact on economic growth and em-ployment, in particular on a short-term basis. The nationalaccounts statistics of the fourth quarter 2008 is a tellingexample. The households’ savings ratio at that time rose bymore than 4 percentage points to 7.4 percent of disposableincome (compared with the same quarter in 2007). The in-creased savings imply a corresponding loss of consumptiondemand. The contribution to the drop in GDP was aboutone percentage point.

According to traditional economic theory there are differentmotives behind households’ short-term savings (ination ad-

justed yield, keeping a buffer etc.), Similarly, demographicfactors are important in a long term perspective.

The financial crisis affects consumer and sa-

vings patternsOne important explanation of the sharp rise in savings isof course the current crisis in the economy. Worries for ex-pected consequences in the form of increased warnings ofunemployment and decreasing asset prices (stock exchangeand real estate) have probably contributed to the “abnor-mal” behaviour; namely, that households do not consumeincome increases as they usually do. At the same time it isworth mentioning that the savings concept in the nationaland nancial accounts is not the same thing as the liquiditybuffer that can immediately be used for consumption of

goods and services. Firstly, a considerable amount is thereal savings, i.e. net acquisition of non-nancial assets (realestate, machinery, equipment). This component is fairlystable over time. Secondly, changes in pension fund reser-ves are a major part of households’ savings with almost noliquidity at all. Thirdly, as an effect of the accrual basis usedin the national accounts, some changes in taxation ruleshave not yet had a full monetary effect for the householdsand they may not be aware of the full income picture.

Amortizations behind slower debt growth?Another factor that “locks” savings are amortizations onhousehold liabilities. During the fourth quarter the lowestdebt growth for a fourth quarter since 2003 was recordedin the statistics. Households’ outstanding stock of liabili-ties thus increased SEK 37 billion during the fourth quartercompared with an increase of 57 billion the correspondingquarter of 2007. However, it is not possible to draw anydecisive conclusion about the amount of amortizationssince the slower debt growth could also be the effect offewer new loans due to lower turnover and falling priceson the housing market. A conceivable scenario could bethat the earlier high interest payment has been exchanged

into increased amortizations with no immediate effect onhouseholds’ propensity to consume.




Some important income and expenditure items in thehousehold sectorFourth quarter 2008 and changes compared with fourthquarter 2007

Level Change

Wages and salaries 326 SEK billions 3.1 %Pensions. social benefits 134 SEK billions 2.4 %Operating surplus etc. 62 SEK billions –1.3 %

Income taxes –114 SEK billions –4.1 %Capital taxes –2 SEK billions 10.9 %Interest income 7 SEK billions 8.9 %Interest expenditure –30 SEK billions 18.7 %Disposable income 378 SEK billions 4.6 %Consumption –375 SEK billions –0.3 %Saving 1 3 SEK billions 18 mdrSaving in pensionfund reserves 27 SEK billions –2.7 %Saving 2 30 SEK billions 18 mdrSavings ratio 1 0.8 % 4.8 % pointsSavings ratio 21 7.4 % 4.3 % pointsGross capital formation 21 SEK billions 5.8 %Net lending 27 SEK billions 26 SEK billions

Net lending accordingto the financial accounts 32 SEK billions 23 SEK billionsFinancial assets 69 SEK billions 14.2 %Liabilities –37 SEK billions –30.0 %

Statistical uncertainty …However, it should be pointed out that the calculations ofincome and savings in the national and nancial accountsare subject to uncertainty. For instance, in the nationalaccounts, income from the hidden economy etc. (mixedincome) is estimated roughly at 5 percent of GDP. Furtherthere are some problems with periodizing interest. The

most important uncertainty is nevertheless the normally badcorrespondence between the non-nancial and nancialaccounts as regards the calculation of net lending.

... but a consistent savings picture during thefourth quarterHowever, in the fourth quarter of 2008, both the leveland the change of net lending are fairly consistent in thetwo ways of calculation. This is valuable for the economicanalysis. Household income, expenditure, savings and howthey have saved can then be studied simultaneously. Thehigh savings rate is consequently reected in the quarterlystatistics on household nancial assets and liabilities (Spar-barometern). These statistics show a fourth quarter recordgure for households’ net lending. Liabilities increasedslower and nancial assets higher than normally.

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Household financial assets and liabilitiesFourth quarter 2008. Change compared tocorresponding quarter previous year. Billion SEK

Data up to and including 2008Source: Financial accounts

AssetsLiabilities

Contact person: Bo Bergman, 08-506 945 42

1 The ofcial savings ratio




Household consumption

Households postponed their consumptionHousehold consumption fell by 3.3 percent in volume in

the fourth quarter of 2008, compared to the same quarterlast year. At the same time savings rose substantially. This isthe lowest quarterly consumption development in 15 years.Household purchases of passenger cars contributed themost to the decline. Household consumption expendituresaffected GDP growth downwards by 1.1 percentage points,adjusted for imports.

As described in the section about household income andsavings, the large reduction of household consumption inthe fourth quarter was because households chose to save amuch larger share of their disposable income than before.

Households’ opinions about the economic situation, bothfor the household and for the total Swedish economy, wasfor the fourth quarter 2008 the gloomiest since 1993, ac-cording to the Consumer Condence Indicator produced bythe National Institute of Economic Research. Householdsexperienced to a higher extent that it was the wrong time tobuy capital goods and to renovate their homes. Meanwhilethe apprehension of becoming unemployed rose. Accordingto the Labour Force Survey the number of employees wasunchanged during the period, while the number of noticesof lay-offs rose. The number of notices of lay-offs was four

times as high in the fourth quarter as in the third quarter of2008. This was one of the factors that may have contributedto creating worries among households when uncertaintyabout future income increased.

Lowest consumption growth in the last 15yearsReal household consumption expenditures, NPISH ex-cluded, fell by 3.4 percent in volume terms in the fourthquarter of 2008 compared to the corresponding quarter ofthe previous year. This is the greatest volume decrease a

single quarter since the last nancial crisis back in 1993.Then consumption fell by as much as 6.9 percent. A reasonbehind that crisis was the interest rate shock caused bythe tax reform which took place in 1990–1991, affectinghouseholds with heavily mortgaged estates severely. A realinterest rate increase made consumption less desirable andhousehold savings rose tremendously.

A decline in household consumption for two quarters in arow has not occurred since the beginning of the 1990s. TheIT crash in the beginning of the 21st century did not inu-ence consumers to the same extent. At most consumption

decreased by 0.4 percent. The development of householdconsumption after the IT crash has been smoother and lacksthe consumption peaks that can be seen in the years beforethe IT-crash and in 1986 and 1987.

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Household consumptionNPISH1 excluded. Percentage change from

corresponding quarter previous year


Low demand for carsThe single biggest cut in demand from households affectedpassenger car sales. From May 2008 onwards, the numberof newly registered cars bought by companies and hous-eholds fell compared to the same month the previous yearfor every single month. The biggest drop during 2008 occur-red in the fourth quarter when as much as 35 percent fewercars were registered. More than half of the drop is explainedby lower household consumption as companies’ consump-tion/leasing is more robust over time.

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New registrations of passenger carsThousands

Data up to and including February 2009Source: Swedish Institutefor Transport and Communications Analysis

2006 20082007 2009

Household purchases of cars decreased enormously involume terms already in third quarter, by 24 percent compa-

red to the same quarter of the previous year. For the fourthquarter the drop was even bigger, or 42 percent. In total thedrop in the COICOP group transport was slightly more than

1 Non-prot institutions serving households.




15 percent in last quarter of 2008. Instead, households cho-se other alternatives like rail transportation and other publictransport, which both rose by 7 percent. The contributionfrom the group transport to household consumption was–2.2 percentage points. Two thirds of the drop in householdconsumption can thereby be explained by the enormousdecrease in transport.

Household consumption fourth quarter 2008 Share of Change in Contribution to household volume a raise in consumption, % compared to household Q 4 07, % consumption, %

Food and non-alcoholic beverages 15 –1.7 –0.2Alcoholic beverages and tobacco 4 –8.0 –0.3Clothing and footwear 6 0.0 0.0Housing 32 0.7 0.2Furnishings 6 –5.3 –0.3Health 3 3.1 0.1Transport 14 –15.6 –2.2Communications 3 9.9 0.3

Recreation and culture 13 –0.1 0.0Education 0 2.1 0.0Restaurants. hotels 6 –1.8 –0.1Miscellaneous goods and services 12 –0.5 0.0Total consumption in Sweden 101 –2.6 –2.6Of which purchases by visitorsfrom abroad –6 6.7 –0.3Of which consumption byresidents in Sweden 94 –3.6 –3.8Direct purchases abroad byresidents in Sweden 5 –11.4 –0.5Total Swedish househ. consumption 100 –3.4 –3.4

Source: National accounts

Total household consumption, exclusive of NPISH, de-creased by 3.3 percent in volume terms from the fourthquarter 2007 to the same quarter 2008. Exclusive of NPISH,total Swedish household consumption dropped by 3.4percent.

Households reduced not only their consumption of durablegoods as cars and furniture. Expenditures for tobacco andfood decreased by as much as 21 percent. Both groupshad large price increases, 6.4 and 7.6 percent respectively,since the fourth quarter last year, which may have affectedthe consumers to tighten their consumption and choose

cheaper alternatives. Because the Swedish crown declinedin value compared to other currencies, imported goodsbecame more expensive and exported goods cheaper. TheTCW index, which measures the Swedish crown accordingto a weighted basket with foreign currency, clearly showsa weakening of the Swedish crown from the third to thefourth quarter. The consumption of Swedish residents ab-road decreased sharply and contributed to the drop in totalSwedish consumption by –0.5 percentage points. However,is not necessarily due to lower consumption abroad. Forexample, if more people buy “all inclusive” charter trips

where food and beverage are included in the price, it lookslike consumption abroad has decreased.

In addition, electronic goods like TV, DVD, photo equip-ment and computers (included in miscellaneous goods and

services) have contributed strongly in recent years to therise in household consumption. In this commodity grouplarge quality adjustments have taken place. More technicalimprovements are included without a corresponding risein prices. As a consequence the price indexes decrease.Household consumption of these products still increasesbut only when adjusting for quality improvements, that is,in constant prices. The total amount, in current prices, thathouseholds paid for these kinds of goods decreased in boththe third and the fourth quarter of 2008. Telecommunica-tions showed the opposite trend, increasing by almost 10percent.

Decreasing household consumption in 2008Households lowered their consumption in favour of savingsduring the last part of 2008. As a result, total consumptiondropped for 2008. Household consumption expenditures,exclusive of NPISH, decreased by 0.2 percent in 2008 com-pared to 2007.

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Household consumptionPercentage change from previous year


Furnishings

Motor vehicles

TransportAlcoholicbeverages

In the graph some of the COICOP groups are shown thathad the largest impact on household consumption develop-ment during fourth quarter of 2008. Looking at all of 2008,household consumption expenditures rose for most of thegroups compared to 2007. Growth has slowed down and isnow lower than in previous years. One signicant exceptionis of course the purchase of cars, which has fallen tremen-dously from 2007 to 2008.

For the entire year of 2008 households have gradually lowe-red their consumption each quarter, seasonally adjusted andin constant prices. Household consumption (excl. NPISH)has decreased every single quarter during all of 2008, com-pared to the previous quarter. Consumption for both the rstand the second quarter decreased by 0.5 percent comparedto the previous quarter. Consumption for the third quarterfell by another 0.8 percent, and fell in the last quarter by 1.2

percent. However, it should be noted that seasonal adjust-ments are more unstable when exceptional changes occur.

Contact person: Caroline Ahlstrand, 08-506 943 33




Government consumption

Government consumption still growingThe total government consumption expenditure increased

by 1.3 percent in 2008 and thus gave a positive contribu-tion to the GDP development. The social benets in kindcontinued to grow strongly during the year and the quarter.Investments in the public sector rose by 4.4 percent involume in 2008.

Development for the sub-sectorsCounty council consumption continued to increase even in2008, this time by 2.4 percent. Municipalities’ consumptionexpenditure grew by 1.7 percent, mostly because of thesharp increase in social benets in kind. Central govern-

ment consumption expenditure declined by 0.4 percent.The main reason for the decline of government consump-tion was weak production, combined with increasing sales(which is a deduction from consumption). The increase ofsocial benets in kind (in part because of the new dentalreform) eased the decline somewhat.

-3

-2

-1

0

1

2

3

4

5

Q 4 08Q 3 08Q 2 08Q 1 08

Government consumptionVolume change from corresponding quarter previous year. Percent


Central governm.Municipalities

County councilsGeneral governm.

Since public consumption is now calculated using volumeindicators for the production of individual services, pro-duction is of great importance in addition to sales and thesocial benets in kind. Therefore the accounts of publicconsumption are complemented here with volume growthrates for both the self-produced individual and collectiveservices.

2008 General Municipa- County General gov., government lities councils AP-funds incl.

Consumption 1.3 1.7 2.4 –0.4

Production 0.5 0.3 1.5 0.0- individual services 0.4 0.1 1.5 –1.0- collective services 0.6 0.9 0.9 0.3

Consumption volume according to currentand older method

Volume calculated according to the current method is hig-her than that calculated according to the old cost method,except for general government for the full year 2008.

2008 General governm. Municipa- County General gov., consumption lities councils AP-funds incl.

Volume measures 1.3 1.7 2.4 –0.4Cost method 1.0 1.1 1.8 0.1

Consumption of municipalities increased by1.7 percentThe municipal consumption volume growth was 1.7 percent

in 2008, but last quarter it grew by only 0.6 percent. Astrong contributing factor to the poor development at theend of the year was the number of hours worked, which de-creased in local municipalities. Hours worked are importantfor the outcome because they have great importance for wa-ges and social contributions in the collective consumptionbut also for the quarterly distribution that is made of volumemeasures for the individual production. Municipalities’own production has evolved slightly positively in 2008. Themajor activity in the individual services that had a negativeeffect was compulsory school, where production fell by

3.8 percent, and thus helped to hold back the productiongrowth in 2008. Production of collective services, whichrepresents approximately one quarter of total municipalproduction, had a positive development for the entire yearof 2008.

The social benets in kind grew by 9.7 percent in the year2008 and contributed most to the volume growth for muni-cipalities. Purchases of main activities like e.g. educationalservices and elderly care, increased throughout the year.Municipalities with the largest increases reported that moreand more schools operated privately, and that more child-

ren are in preschool. Elderly care has been placed on theprivate operators in a larger scale.

Council consumption rose by 2.4 percentThe volume measure of general hospital care, which con-stitutes the bulk of production for county councils, grewby 1.1 percent, while specialised medical care, which isthe second largest activity for county councils, grew by 0.6percent. Since over 90 percent of the costs of production inthe county councils is attributed to the production of indi-vidual services production, development of these coincidesin principle with the development of the total productionwithin the county councils.




Gross capital formation

Investment boom now brokenThe long-term upward trend for gross xed capital forma-tion now seems to be broken. Compared to the previousquarter, gross xed capital formation for the third and fourthquarter of decreased slightly. Due to the considerable GDPgrowth in 2007, the gross xed capital formation ratio in-creased further compared to the year before, and is now thehighest since 1990.The most important reason for reducedinvestment development in 2008 was a sharp decrease inhousing construction. During the fourth quarter investmentsin inventory had a signicant downward effect on GDPgrowth.

The economic bright spot that has endured for a long time isnow beginning to fade. The weakening of the economy hasnow also reached investments. The long-term upward trendfor gross xed capital formation now seems to be broken.Those investments which increased incessantly quarter byquarter since third the quarter 2003 have now decreasedduring both third and fourth the quarter of 2008. The de-

creases, even though weak, have been by a few tenths of apercent, seasonally adjusted and compared to the previousquarters.

In addition, measurement over four quarters now shows adownturn. During the fourth quarter of last year, gross xedcapital formation was thus slightly more than one percentunder the level for the fourth quarter 2007. This implies thatthe downturn in investments – in terms of GDP contribution– corresponded to 0.2 percentage points of the actual GDPdownturn of 4.8 percent. Due to the stronger developmentearlier in the year, gross xed capital formation still rose

by 3.5 percent in 2008, implying that the rate of increasewas more than half that of the year before, and the lowestincrease since 2003. Despite the slowdown, gross capitalformation was the fastest growing item in the balance ofresources last year.

90

100

110

120

130

140

150

200820072006200520042003200220012000

Gross fixed capital formationVolume index 2000=100. Seasonally adjusted quarterly figures


Gross fixedcapital formation

GDP

High investment ratio in a historic

perspectiveDespite the strong development, the debate on the nationaleconomy has often brought forth viewpoints that invest-ments in Sweden are too weak and too low. However, froma weak starting point a few years into the current decade,investments have gained strength as a feature in the eco-nomy. Seen from a longer time perspective, the current levelof investments in the economy is seen as high. Investmentslast year continued to develop considerably better thanthe entire GDP, as illustrated in the investment ratio (thepercentage gross xed capital formation of GDP) which rosefrom 19 percent in 2007 to 19.6 percent in 2008. This is thehighest level since 1990. Since 1980 the investment ratiohas been higher than the current one only during the years1987–1990, i.e. during the years of the overheated econo-mic boom.

Central government consumption expenditu-re decreased by 0.4 percentThe decline in central government consumption was due toan almost unchanged production while sales increased. Theproduction volume for all of 2008 ended was unchanged.This is explained by the production of individual serviceswhich decreased by 1.0 percent, while the productionof collective services, the largest part of the governmentproduction which amounts to just over three quarters,increased by 0.3 percent.

The production of individual services decreased because se-veral of the largest areas, such as university education, had

a negative volume growth in all quarters, mostly because offewer registered students.

Durable goods for defence decreased by 17 percent in2008. Central government sales, both external and internal,rose by 4.6 percent in 2008. General government social be-nets in kind increased by 8.9 percent in volume comparedwith 2007. The explanation is mainly the sharp rise in the

second half of 2008 due to increased dental care expenditu-res as a result of the new dental care reform.

Contact person: Vera Norrman, 08-506 943 04




The percentage of gross xed capital formation of GDP isalso better in an international perspective than before. In2008 the investment ratio for the EU 15 was 20.9, implyingthat the distance to the EU15 has shrunk by 1.3 percentagepoints in recent years. In 2003 when the upturn for invest-ments began in Sweden, the distance to the EU15 was 3.4percentage points. Germany, the largest member countryin the EU, had an investment ratio that was 19.2 percentlower than in Sweden, and during the most recent ve yearperiod its growth was considerably lower at slightly morethan one percentage point. Sweden’s results are even morefavourable when compared to the world’s largest economythe US. In 2008 the US investment ratio was 17.8 percent, adecrease of one-half of a percentage point since 2003.

0

5

10

15

20

25

200820072006200520042003200220012000

Gross fixed capital formationPercentage of GDP

Data up to and including 2008Source: Eurostat

EU15

Sweden

It has also been maintained that the upswing that occurredin the investment ratio in recent years is mainly due to thesharply rising housing investments during this period, butthis does not hold true either when comparing backwards intime. In 2008 the investment ratio was 16.5 percent withoutconsideration to housing investments. This gure was an im-provement of about one-half of a percentage point compa-red to the year before. By using this method of calculating,the investment ratio since 1980 was only higher during theyears 1988–1990.

Significant cutbacks within the financialsectorFor the rst time in many years, public sector investmentsduring the fourth quarter increased by a few percent,clearly better than investments of the business sector whichnow showed an equal decrease. Within the public sector,municipalities showed the largest increase in investments,mainly due to a sharp increase in construction investmentsin Stockholm. The main reason for the downturn within thebusiness sector, which otherwise was the rst downturn sin-ce the beginning of 2004, was due to the sharp declines of

construction and property management. Within the businesssector, development is otherwise more uneven than usual.Certain industries reported very large increases of theirinvestments while others showed considerable downturns.

The transport sector, mining industry and the energy sectorhad the most expansive development, with continued sub-stantial increases of investments during the fourth quarterby about 39, 20 and 9 percent, respectively. Despite theincreasingly weak industrial economy, investments in thisarea still have been doing relatively well, with a marginaldecrease in the fourth quarter of barely one percent andan equally large rise for all of 2008. Those industries thathave cut back on development are business services (down4.5 %) and the nancial sector where the crisis seems tohave been hit hard and fast, diminishing the will to invest.Credit institutes and insurance companies reduced theirinvestments sharply, by over 17 percent in the fourth quarterafter a considerable decrease in the third quarter as well.

Gross fixed capital formationSEK billions, current prices and percentage change from cor-responding quarter previous year, constant prices

2008 Full year Q 1 Q 2 Q 3 Q 4

Business sector 523 5,6 5,7 4,0 –1,9 Manufacturing industry 88 –0.4 1.5 2.3 –0.8 Energy industry 49 –3.5 7.8 2.8 8.6 Services producers1 193 13.1 8.7 10.1 4.5 Business services 46 21.8 20.0 16.6 –4.5Public sector 97 7.9 13.7 –4.3 1.8 Central government 47 11.8 17.2 13.0 2.7 Municipalities 50 3.9 10.4 3.9 1.0Total 620 5.9 6.8 2.8 –1.2Machinery 201 4.8 7.9 8.3 –0.1Transport equipment 63 22.2 8.3 22.3 15.4Housing 98 0.3 –2.1 –6.1 –14.7Other construction 164 5.4 13.5 1.1 5.8

Software 94 2.4 3.2 –3.4 –10.7Source: National accounts

Drop in housing construction continues toaccelerateOne of the most outstanding features of the investmentpicture during last year was the sharp downturn of hou-sing construction. During the fourth quarter the downturncontinued to accelerate with a 14.7 percent drop. Similar topreviously during the year, construction of homes droppedsharply and accounted for the entire downturn of housing

investments. New construction for one-or two-dwellingbuildings fell by 26 percent, and that for multi-dwellingbuildings by 23 percent. Renovation investments continuedto increase, but still at a decreasing rate. The slowdown andweakening of housing construction has been going on in-cessantly quarter after quarter since the beginning of 2006,when the rate of increase was highest. Housing constructiondecreased by 5.4 percent for all of 2008, the rst clearlymarked downturn since 1997.

However, investments in other buildings, plants and roadscontinued to show a sharp increase of 5.7 percent, resulting

in a further increase of one percentage point for the entireyear. The development for granted building permits does notindicate any quick turning point upwards for construction

1 Excluding real estate services.




since the number of permits continued to decrease duringthe fourth quarter. Nevertheless, this decrease was at a slo-wer rate than the sharp downturn of the third quarter.

Leasing investments gain groundIn sharp contrast to the weak development in the construc-tion industry, investments for transport means grew sharplyby 15 percent in the fourth quarter, after an increase of 22percent the quarter before. One important reason was thatcar leasing continued to increase sharply, but at the expenseof a continued sharp decrease of car purchases nancedindividually.

This pattern of increased nancing through leasing at theexpense of individually nanced investments re-occursin the way that machinery investments are now nanced.During the fourth quarter investments in machinery andequipment remained unchanged at a high level, implyingthat the upswing for the entire year totalled a strong 4.9

percent. Investments in other items, software in particular,decreased during the fourth quarter, due to a signicantdecrease in brokerage fees by 11 percent.

According to the most recent questionnaire on investmentssent to enterprises in the beginning of March, further de-creases in business investments are seen for 2009. Basically,all important industries report plans for reduced invest-ments, in many cases signicant decreases in 2009 com-pared to 2008. This applies to both the manufacturing andconstruction industry and the private service sector.

Investments in inventory brought down GDPgrowthInventories had an unusually signicant inuence on thesharp downturn of the Swedish economy during the lastquarter. From the fourth quarter of 2007 until the fourthquarter of 2008, GDP fell by 4.8 percent. The decreaseof industrial inventories contributed a full 1.8 percentagepoints to this downturn. Considerable decreases in invento-ries from the manufacturing industry contributed the most,but decreases in trade inventories were also behind thedownturn.

Sharp decrease in industrial inventories ofgoods under productionA dramatic decline occurred for industrial inventories ofgoods under production, which accounted for the entiredecrease in inventories from the fourth quarter of 2007until the fourth quarter of 2008. Looking at the change ofthese inventories alone, the corresponding decline of GDPdevelopment was 1.5 percentage points. Development ofthese types of inventories is directly connected to produc-tion development in enterprises and industry. The decreasein these inventories is not due to direct actions or decisionsfor changes of inventories in the enterprise, but occurs auto-matically as a result in the changes of the production levelof the enterprise. This decrease was so extensive during thefourth quarter because of the sharp cut-backs in produc-

tion levels that occurred in industrial enterprises betweenthe fourth quarter of 2007 and the fourth quarter of 2008,which totalled 12.5 percent.

Involuntary build-up of inventory of finishedgoodsAs the economic situation gradually worsened, a build-up of inventories of nished goods occurred between thefourth quarter of 2007 and the fourth quarter of 2008. Ac-cording to inventory statistics, inventories had increased bynearly SEK 3 billion or about 4 percent in constant prices.The increase in current prices for these four quarters wasconsiderably larger, or SEK 7.3 billion. Considering the shar-ply weakened demand, an increase of inventory of nishedgoods was both involuntary and unwelcome. However,the increase in inventory of nished goods in industry onlyhad a small effect on GDP development between the fourthquarter of 2007 and the fourth quarter of 2008.

In the short-term perspective, the build-up of inventory ofnished goods has been much more extensive. The BusinessTendency Survey shows a drastic worsening of the situa-tion of inventories for industry, mainly concerning nishedgoods for direct delivery to customers, during the secondhalf of last year. The build-up of inventory of nished goodsbegan to increase more rapidly during the third quarter andthen rose even more signicantly during the fourth quarter,seasonally adjusted and compared to the quarter before.Current assessments from industrial enterprises about thesize of inventories of nished goods have not been so nega-tive since the Swedish economic crisis of 1991.

The third type of inventories in industry, intermediate goods,which does not actually affect estimations of production,also increased despite the sharp decline of the productionlevel. According to inventory statistics, the rise from thefourth quarter of 2007 to the fourth quarter of 2008 was SEK2.4 billion in current prices, and SEK 0.5 billion in constantprices. However, not even in the case of inventories ofintermediate goods have desired levels of inventories beenreached. Industrial enterprises have expressed increaseddissatisfaction in the Business Tendency Survey about in-

ventories of intermediate goods being too large in the fourthquarter.

Reduced inventories in tradeA signicant decrease of inventories occurred in trade fromthe fourth quarter of 2007 to the fourth quarter of 2008. Thedecrease of inventories here had a downward inuence onGDP by about 0.7 percent. Compared to the year before,wholesale trade had the largest decrease of inventories, buttrade in infrequently bought goods has also seen a reduc-tion of inventories during the period. Within other areasof business – the energy sector and forestry – inventories

increased somewhat and thus contributed to GDP develop-ment by 0.2 percentage points.

Contact person: Bo Sandén, 08-506 946 94




The business sector

A historical fall in the business production

During the fourth quarter of 2008 production in the busi-ness sector fell sharply. This resulted in a drop in productionof goods from 2007 to 2008, which was only the secondtime since 1994 production fell on an annual basis. Thisdecrease was also larger than that in 2001.

The value added of the business sector dropped from thethird to the fourth quarter by an extremely large percentage.After a negative growth rate during the rst two quarterswith around half a percentage point for each quarterand more than a full percentage point during the third, itreached the extreme value of 2.4 percentage points during

the last. As can be seen in the graph the drop in productionwas larger during 2008 than ever before during the period1993–2008. The growth rate for production has been nega-tive only in four previous quarters, never with higher growthrates than 0.3 percent. Today’s nancial crisis is unique inmodern time and it is not particularly surprising that theeffects on the Swedish economy have been that dramatic,considering that Sweden’s economy is small and highlydependent on exports, particularly for investment goods.

-3

-2

-1

0

1

2

3

08070605040302010099989796959493

Value added in the business sectorPercentage change compared to previous quarter.

Sesonally adjusted


It is of course necessary to take into account that seasonaladjustments are especially problematic when developmenthas been so dramatic.

The manufacturing industry has beenaffected most sharplyThe export of goods has dropped signicantly, as has

already been shown. The engineering industry is normallya high growth industry, but its specialisation in investmentgoods has proved to be a severe disadvantage just now.The nancial crisis has made the nancing of investment

difcult, and in many cases quite impossible. This has ad-

ded to the impact of the fall in the real economy, which hasbeen caused by this crisis that has led to excessive capacityin most industries. This is the background to the very severedrop in demand for investment goods which also normallydecreases towards the end of the business cycle. The chemi-cal and the wood and paper industry have performed betterand been affected to a much smaller extent by the crisis.

-8

-6

-4

-2

0

2

4

6

8

1012

20082007200620052004

Value added for selected manufacturingindustriesPercentage change compared to previous quarter.Seasonally adjusted


Engineering

Chemicals

Wood and paper

After comparatively limited negative growth rates duringthe rst three quarters of 2008, the fourth quarter resultedin a dramatic drop of over 6 percentage points for the valueadded of the engineering industries. Even if the forestryindustry had experienced a negative growth for ve suc-cessive quarters it has developed much less dramatically.Forestry products are to a much larger extent dependant onthe economy at large, including private consumption, which

has eased the negative growth rates. The large drop of theSwedish currency in the second half of the year should alsohave strengthened the industry’s position on the markets,which are typically auction markets. The chemical industryseems to have best survived the crisis.

2008 in total is also uniqueDespite that this year started off quite well and the wea-kening of the economy did not become obvious until thethird quarter, to hit with full force during the fourth, deve-lopment for the full year became extremely weak. Service

production that has reached a growth rate of two percentagepoints during most of the last 15 years, was almost unchan-ged. Goods production that diminished only during the yearof the ICT crisis in 2001 this time dropped much more or by1.3 percent compared to 0.4 percent for 2001.




-2

0

2

4

6

8

10

080706050403020100999897969594

Value added in the business sectorPercentage change compared to previous year.Constant prices


Goods producersService producers

Large differences in employment growthDevelopment in the number of hours worked during the last

two quarters of 2008 has been very different for the goodsproducers compared with the service providers. Growthhas stopped in the service producing parts of the businesssector during these two quarters, but compared to the goodsproducers it is still a relatively uneventful development.

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

20082007200620052004

Hours workedPercentage change compared to previous quarter.Seasonally adjusted


Serviceproducers

Goods producers

The fall in the demand for products from the manufacturingindustries has caused a sharp drop in worked hours bet-ween the third and fourth quarter of 2008. However, thedecrease in the number of worked hours has not been onthe same magnitude as the drop in production.

The large number of people that have been given noticesof lay-offs during the last quarter indicates that the drop inhours worked will increase substantially. This developmenttranslated into yearly terms can be seen in the graph below.In yearly terms development looks quite different. Service

providers as well as goods producers increased their inputof hours worked sharply in 2008.

-4

-2

0

2

4

6

080706050403020100999897969594

Hours workedPercentage change compared to previous year

Data up to and including 2008Sourcce: National accounts

Goods producersService producers

Productivity growth has remained weakThe growth rates for the labour productivity in the service

producing part of the Swedish business sector have remai-ned positive and very stable during 20 quarters in a rowafter the ICT crisis 2001 up to the second half of 2006.However, the growth rate has on average been substantiallylower than for the manufacturing industry.

-4

-3

-2

-1

0

1

2

3

4

5

20082007200620052004200320022001

Labour productivityPercentage change compared to previous quarter.Seasonally adjusted


Serviceproduction

Manufacturingindustry

This development has ceased to exist since the growth ratehas been positive for just one of the last six quarters. Asseen in the graph above the weak production growth hasso far not led to a large decrease in the number of hoursworked. This is not a sustainable development in the longrun. Not even in the manufacturing industry has the largedecrease in hours worked matched the very large drop inproduction, in spite of the large reductions during the fourthquarter. This has resulted in a decrease in labour producti-vity during 2008 for this part of the business sector as well.The productivity level in 2008 was almost three percent

lower compared to 2007 for the goods producers as well asfor the service providers.

Contact person: Hans-Olof Hagén, 08-506 944 66




Labour market

Disturbing state of the labour marketThe economic crisis, which became stronger during the

autumn, had not yet led to any dramatic change in employment or unemployment in the fourth quarter. However,a worsening state of the labour market is clearly visible.Labour Force Survey (LFS) data for the rst month of 2009conrm that a decline in employment and an increase inunemployment are under way.

Seasonally adjusted data1 indicate a minor decline in em-ployment2 from the third quarter and an increase in relativeunemployment one quarter earlier. The difference in timeis because of the continuously increasing labour force.This probably means that the last three years’ continuous

increase in employment has ceased for the time being.

0

1 900

2 000

2 100

2 200

2 300

2 400

20082007200620052004200320022001

Employed, ages 16–64 by sexSeasonally adjusted quarterly values. Thousands

Data up to and including fourth quarter 2008Source: LFS

Employed men

Employed women

Unemployment has increased more for women than formen, which reects the sex distribution among industries.

0

50

100

150

200

250

20082007200620052004200320022001

Unemployed, ages 16–64 by sexSeasonally adjusted quarterly values. Thousands


Unemployed men

Unemployed women

0

1

2

3

4

5

6

7

8

9

20082007200620052004200320022001

Relative unemployment, ages 16–64 by sexSeasonally adjusted quarterly values. Percent of

the labour force


MenWomen

The number of job openings, according to seasonallyadjusted data from the survey on job openings and unmetlabour demand, has been slowly declining since the begin-ning of 2008 and fell rapidly during the last quarter. Thedecline in the future need for recruitment occurred predo-minantly in the largest rms, or those with more than 200employees.

0

10

20

30

40

50

60

70

80

90

20082007200620052004200320022001

Job openingsSeasonally adjusted quarterly values. Thousands

Data up to and including fourth quarter 2008Source: The survey on job openings and unmet labour demand

Neither employment nor unemployment have yet reachedthe levels of the previous downswing around 2004. Thenumber of job openings, however, is close to the lowestlevel of 2004. The number of hours worked, which usually

1 All seasonal adjustment has been done using Demetra (Tramo/Se-

ats) with default adjustments. These data are not available in StatisticsSweden’s statistical database, since ofcial seasonally adjusted datahave not yet been produced.

2 If, like in the national accounts, only those employed in Sweden arecounted, the decline is larger.




declines earlier than the number of employees when thebusiness cycle turns downwards, follows the developmentof employment this time.

0

126

128

130

132

134

136

138

140

20082007200620052004200320022001

Hours workedSeasonally adjusted quarterly values. Millions of hours per week


The number of people outside the labour force increasesalong a trend, primarily because of the increasing popula-tion and the rising average age. Following a decline fromthe beginning of 2007, the number has increased from themiddle of 2008 (see the table below). Exits from the labourmarket into studies or early retirement are to some extentcomplementary to an increase in unemployment.

The number of notices of lay-offs increased, according todata from The Swedish Public Employment Service, rapidly

at the end of 2008, from about 14 000 in the second andthird quarters to about 57 000 in the fourth quarter.

0

10

20

30

40

50

60

20082007200620052004200320022001

Notice of lay-offsThousands

Data up to and including fourth quarter 2008Source: The SwedishPublic Employment Service

The notices primarily concern permanent employees. Tem-porary employees are always hit stronger in the beginningof a downswing, since their positions can be terminated as

soon as the agreed employment period ends. Simultaneous-ly, there is a tendency for employers to give more notices topermanently employed people than they are actually goingto carry out. The strongest statistical correlation between thenumber of notices and the increase in unemployment oc-

curs with a two quarter lag, which goes well with the timeneeded for transforming a general notice into dismissals ofspecic people. Also, dismissals of fewer than ve employ-ees do not have to be preceded by notices. Therefore, theconnection between the number of notices and the numberof unemployed is weak.

Unemployment also hits permanentemployeesThe ow statistics from the LFS show that the number ofpeople with permanent employment that have becomeunemployed has increased substantially during the last twoquarters of 2008.

The number of notices during quarter one and two wasjust below 15 000. If a two quarter lag between notice anddismissal is taken into account, the outow of people frompermanent employment into unemployment or out of thelabour force during the last quarter reects this increase in

notices. If the large number of notices in the fourth quarteris carried out, there is a risk of a dramatic increase in thenumber of dismissals in the near future.

-30

-20

-10

0

10

20

30

40

50

60

Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3

Flows between different groups in the labourmarketPercent change from corresponding quarter previous year


20072006 2008

Permanent employees UnemployedPermanent employees Not in LFTemporary employees UnemployedTemporary employees Not in LF

The manufacturing industry and the publicsector declined mostThe worsened state of the labour market is all but surpri-sing. The manufacturing industry has experienced a markeddecline in new orders since the beginning of 2008 and thedegree of capital utilisation has gone down during the lastthree quarters to the lowest level since 1992.

According to seasonally adjusted data from the rm-basedshort term employment survey, which measures the numberof employees (excluding the self employed), employmentin the goods producing industry has declined by more than

one percent from the previous quarter. This is still a smallerdecline than the one in the public sector, which incidentallyhas been going on largely uninterruptedly since the begin-ning of 2007.




There were almost 8 400 employees whose employers hadgone bankrupt during the fourth quarter. This is the lar-gest number in the 21st century. It is worth noting that thenumber of bankruptcies is usually the largest at the end of arecession, not in the beginning.

Not surprisingly, considering the recent alarming reportsfrom the car industry, the motor vehicle industry was one of

the industries where employment decreased the most. Morethan half of the notices in the manufacturing industry duringthe fourth quarter concerned the motor vehicle industry,while it held only 27 percent of the employment in themanufacturing industry. The largest relative decline (5.7 %)occurred in the wood and paper products industry. Theconstruction industry and the service producing industriescontinued to increase their employment.

-1.5

-1.0

-0.5

0.0

0.5

1.0

TransportBusinessservicesServicesConstruc-tionManu-facturingPublicsectorBusinesssectorTotal

The number of employees in the fourth quartercompared to the third quarter 2008 by industryPercent change, seasonally adjusted values

Source: Short Term Employment

The development of employment in different parts of thecountry is highly connected to the industrial structure.During the fourth quarter, the number of employees hasdecreased in all regions except for Stockholm and northcentral Sweden. The negative development is mainly due tofewer employees in the public sector. A part of this declinesurely consists of a transfer of personnel to service compa-nies.

-1.6

-1.4

-1.2

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

SouthSweden

Smålandand theislands

WestSweden

Stock-holm

EastMiddleSweden

NorthMiddleSweden

MiddleNorrland

UpperNorrland

The number of employees in the fourth quartercompared to the third quarter 2008 by region(NUTS 2)Percent change, seasonally adjusted values

Source: Short Term Employment

Contact person: Claes-Håkan Gustafson, 019-17 61 19

Development of a few indicators of the state of the labour market

Year Employ- Employment Unemploy- Relative Outside Hours Job Notices of Quarter ment share of ment unemploy- labour worked openings dismissal ages 16–64 population ages 16–64 ment force ages 16–64 ages 16–64 ages 16–64 ages 16–64 Thousands Percent Thousands Percent Thousands Thousands Thousands Thousands

2004 1 4 175 73.0 365 8.0 1 182 128 620 36 17 2 4 262 74.4 398 8.5 1 071 131 450 41 17 3 4 312 75.1 348 7.5 1 080 111 910 37 13 4 4 227 73.5 325 7.1 1 197 134 230 36 142005 1 4 178 72.6 364 8.0 1 213 129 660 38 18 2 4 269 74.1 399 8.6 1 096 137 110 46 13 3 4 335 75.1 337 7.2 1 101 115 460 38 10 4 4 268 73.8 327 7.1 1 190 138 430 45 112006 1 4 234 73.0 358 7.8 1 209 137 590 49 10 2 4 331 74.4 379 8.0 1 112 132 820 48 8 3 4 434 76.0 302 6.4 1 098 119 050 44 8 4 4 365 74.7 282 6.1 1 200 141 180 45 112007 1 4 338 74.0 315 6.8 1 205 141 610 53 9 2 4 446 75.7 328 6.9 1 096 137 730 61 6

3 4 543 77.2 265 5.5 1 073 122 550 52 7 4 4 452 75.5 259 5.5 1 182 144 550 52 82008 1 4 421 74.8 291 6.2 1 196 138 410 57 9 2 4 509 76.2 318 6.6 1 091 146 700 55 15 3 4 567 77.1 272 5.6 1 086 121 770 48 14 4 4 440 74.7 293 6.2 1 209 144 400 36 57




Financial crisis as seen in statistics

Statistics suggest a relatively

well-functioning credit marketThe nancial crisis developed very quickly into a real eco-nomic crisis that almost immediately had an impact on de-mand, investment and growth. The drop in Swedish GDP isan expression of this. Paradoxically, however, the crisis is notreected as clearly in the nancial statistics. At an aggregatelevel, the effects on banks and corporate balance sheets areso far relatively small.

However, behind the aggregates of banks’ lending andborrowing there are several underlying components, whichclearly show that the crisis has had an effect on the balancesheets. Firstly, measures taken by the Riksbank and the Swe-dish government have highly contributed to the maintenan-ce of credits. Secondly, banks and non-nancial enterpriseshave had obvious difculties to get credits from abroad.Thirdly, the difculties for banks and mortgage institutionsto renance their securities borrowing abroad resulted inextensive amortizations of approximately 400 SEK billionduring September-November 2008. These amortizations didnot have an equivalent affect on the banks’ balance sheetssince the Swedish krona at the same time depreciated stron-gly relative to other currencies.

The statistics provide no clear answer to whether the non-nancial companies have been faced with a credit collapseor not. The business sector still seems to have been ableto maintain funding, but it has probably happened at highcosts and some categories have most likely been supersededby larger and more creditworthy companies.

BackgroundIn the last issue of the Swedish Economy the recent decade’sdevelopment of the Swedish banking sector’s balance sheetwas described. From 1980 until mid-2008 total assets rose

from 120 to 280 percent of GDP. The increase has beensharp since 2003 when the banks’ balance sheets in abso-lute terms almost doubled. The difference in the nancialsector’s growth in relation to the development of the realeconomy (GDP) has thus increased considerably in recentyears. Another conclusion was that the main explanationfor the increase was not increased lending to Swedishhouseholds and companies but a strong growth of lendingabroad. Finally, it was found that the volume expansionof the banking sector is likely to have passed its peak andthat the banking sector is likely to shrink in the tracks of the

nancial crisis.

In this article, a considerably shorter perspective of prima-

rily the banking sector1 and part of other sectors’ balancesheets will be studied. Other half-year statistics on develop-ments in the nancial sector are now available through thebanking statistics of Statistics Sweden and the Riksbank. Inaddition, data on nancial ows from the balance of pay-ments statistics are available, which also help to highlightthe nancial crisis during the second half of 2008.

Initially, a description of the nancial crisis’ origin is madeand how it is reected in various nancial statistics frombanks and other sectors. The actions of the Riksbank andother governmental actions are given particular attention inthe article. A sector of the economy, which unfortunatelyis not as well illuminated statistically, is the non-nancialcompanies. Media reported that these companies are stron-gly affected by the credit tightening from both banks andthe international capital markets. How is this reected inthe statistics?

The crisis’ rootsThe so called subprime crisis in the United States spreadquickly to the rest of the world through the complexnetwork of nancial instruments and investors who, more

or less aware, had come to be exposed to these Americanmortgage loans. As the credit losses on such loans beganto be large and the extent of the lending became obvious,a deep worry in the nancial sector was spread. A globalmistrust between different nancial players arose.

Late Summer 2008 the crisis was accentuated further whenrst the U.S. government took over mortgage institutionsFreddie Mac and Fannie Mae, and in September LehmanBrothers went into bankruptcy. Now the effects spread andwere seen throughout the global nancial system. In theU.S. and Europe the banking crisis became apparent. The

distrust between banks and other nancial institutions resul-ted in an almost collapsed interbank market. Governmentsand central banks set up massive measures of support thatwere both focused on nationalisation of banks and varioustypes of loan facilities.

With unexpected swiftness, the nancial crisis had imme-diate impact in the real economy. The American car industryfaced urgent problems that spread all over the car industryglobally. Large staff reductions followed and like the ripplesof a waterdrop, the crisis was spread to the whole of thetraditional manufacturing industry. Few countries in theindustrialised world have escaped the ravages of the crisis.

In Sweden, the picture was about the same as in the rest ofthe world. Perhaps Sweden was better equipped than mostcountries to meet the nancial crisis and slowdown in the

1 The banking sector means what is known in the statistical classica-tion as MFIs (excluding Riksbanken) that is to say, banks and mortgageinstitutions. See, e.g. page 17 of “The Swedish economy – statistical perspective” No 3 2008 for a more precise denition.




global economy. Not least, this was reected in the Swe-dish housing market that worked very well until September2008. But in the autumn the nancial crisis also affected theSwedish banks and other credit institutions with full force.The increasing difculties for the banks to get liquiditythreatened to rapidly drain the rms and households’ accessto credit.

The spread to the real sector was almost brutal and therewas a grinding halt in major parts of the manufacturingindustry due to rapidly falling demand. The fourth quarterGDP gure with a growth reduction of almost 5 percentshows that the nancial crisis also very quickly turned into areal economic crisis.

What happened in the banks’ balance sheetsin autumn 2008?On an aggregated level it is difcult to infer any obviouseffects of the nancial crisis in the balance sheets of the

Swedish banks and mortgage institutions. The Money andBanking statistics show that the value of banking sectorlending during the autumn and winter of 2008 continuedto increase, albeit at a fairly slow pace. Neither the valueof the banking sector’s shares or debt securities changeddramatically during the period. It can be concluded thatthe growth in banks’ balance sheets appear to have sloweddown.

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2 000

4 000

6 000

8 000

10 000

12 000


-08

Dec

-07

Banks' assetsSEK billion

Source: Financial market statistics

LendingShares and equity

Debt securitiesOther assets

Data up to and including December 2008

Within the banks liabilities no dramatic changes is shownas a result of the economic crisis. Deposits and borrowingshow a steady increase over the last six months. During thelast months of the year, however, they tend to level off. Mostprobably the banks’ borrowing should have continued to in-crease unless the interbank market ceased to work normallyat the same time as other channels of credits also wereclosed. This is not possible to illustrate only on the basis of

these statistics.

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2 000

4 000

6 000

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12 000

DecNovOctSepAugJulJunMayAprMarFebJan-08

Dec-07

Banks' liabilitiesSEK billion


DepositsOther liabilities

Debt securitiesEquity


The value of securities borrowing declined somewhat in line

with the growing difculties to obtain loans on internationalcapital markets. Despite the depressed growth in balancesheets it still seems as if the banking sector has workedmore or less normally in the autumn and winter. A furtherbreakdown of the statistics is needed to better reect theeconomic crisis’ impact on nancial markets.

Banks’ borrowingWhen disaggregating records of the banks’ balance sheetsand combining the Money and Banking statistics with otherstatistics, a number of events that may be worth highlightingemerge. Several phenomena are widely known; others aredescribed in a less coherent manner, and especially notillustrated in gures.

One of the rst effects of the nancial crisis was that theinterbank market for lending and borrowing almost ceasedto function. This led government and Riksbank to take ahost of measures simply to ensure the functioning of thenancial markets. The authorities’ actions will be descri-bed later in this article. Another immediate consequenceof the emerging crisis was a more or less total stop for thebanks to nance themselves through debt securities in the

international capital markets. Banking sector issues of debtsecurities have become an increasingly important source tonance loans to households, institutions and companies.The household sector demand for housing nancing hasespecially driven the last few years’ increase in the bankingsector borrowing via debt securities.

In August 2008 the total currency borrowing by debt secu-rities amounted to nearly SEK 1 400 billion (graph below).During the period September to November the stock of se-curities was reduced to SEK 1 170 billion. The graph showsthat the decrease was primarily due to the short-term certi-

cates maturing and that the banks simply could not get newloans. The reduction of the outstanding debt securities port-folio of over SEK 200 billion would have been much largerif it was not for the weakening of the Swedish krona duringthe autumn and winter. When the krona is weakening as it




continuously has done since the crisis began in September,the debt in foreign currencies, expressed in Swedish kronor,automatically increases.

The balance of payments statistics reported in the periodSeptember to November, outows of capital from the ban-king sector at more than SEK 400 billion. In other words, ifthe krona exchange rate had remained unchanged during

that period, the banks’ liabilities should have decreased bymore than 400 billion kronor. Instead, the decline was 210billion. It must be noted that this is not about banks makinglarge exchange rate losses, because virtually all debt securi-ties borrowing in foreign currency are swapped to Swedishkronor, and thus are protected from exchange rate changes.In December 2008 the debt increased slightly again. Again,it depends on the continued weakening of the krona andthat some banks were able to issue both bonds and certi-cates during the month. One bank, with the support ofthe government guarantee program, was able to issue both

bond and certicates during the month (see also below inthe review of the authorities’ actions during the crisis). It se-ems therefore that the market for securities borrowing easedslightly in late 2008.

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1 200

1 400

1 600

2008200720062005

Banks' securities issues in foreign currencySEK billion


Certificates Bonds


While the door was closed during the early autumn forbanks to borrow abroad, non-nancial enterprises’ demandfor bank credits increased. This increase was even moresignicant because most of the non-nancial companiesfaced the same closed door for international securities bor-rowing and consequently the pressure on credit from thebanks increased even more. An acute liquidity shortage forhouseholds and businesses threatened. This led the go-vernment and the Riksbank to take a variety of measures toguarantee banks’ access to capital and hence the enterpriseand household needs for loans.

Quick action by the Riksbank and National

Debt OfficeIn mid-September the Riksbank began to increase the liqui-dity of its foreign exchange reserves by borrowing foreigncurrencies with securities as collateral, so-called repurchase

agreements1. At the same time, the Swedish National DebtOfce (NDO) decided, after discussion with the Riksbank,to issue short-term treasury bills in order to offset the lackof government securities2 that arose during the rst month’sturbulence. The liquidity NDO received was lent to the mar-ket through reverse repurchase agreements with guaranteedhousing securities as collateral. In a rst step, treasury billsof SEK 50 billion were issued but the NDO announced thatthe issued volume could be extended to SEK150 billion. Atthe end of the month, the Riksbank announced, togetherwith the Norwegian and Danish central banks amongothers, the establishment of a currency arrangement (swapfacility)3 with the Federal Reserve. The arrangement wasaimed to provide loans in USD to banks. In total, this swaparrangement corresponded to USD 30 billion. In October the Riksbank offered additional credit facilitiesto banks, this time in SEK with a maturity of three or sixmonths. This was a measure to give banks an opportu-

nity for funding in the longer maturities and at lower costthan was possible in the market. In a number of so-calledauctions over SEK150 billion were lent. At the same timeadditional loans of USD 10 billion were offered. At the endof the month, the government introduced the state guaran-tee scheme for banks and housing institutions medium-termborrowing. For instance, it has led to Swedbank in thewinter being able to issue certicates and bonds for nearlySEK 200 billion4.

The large addition of SEK from the Riksbank led to excessliquidity for the banks that needed to be reinvested in the

Riksbank. The alternatives for these reinvestments wereeither in the form of deposits (ne-tuning operations) orinvestments in Riksbank certicates. These certicates wereat xed interest rates (repo rate) and have 7 days duration.During November, December and also since the end ofthe year, the Riksbank continued to offer loans in SEK andforeign currency to the banking system.

As a result, the balance sheet of the Riksbank since the endof August 2008 has increased from approximately SEK 200billion to SEK 700 billion by the end of the year. The effectsof all actions can be seen in the table below. In assets it can

be clearly seen how the Riksbank’s loans in SEK to banksincreases from virtually zero to SEK 266 billion. The excessliquidity that thus occurred in the banking system was in

1 The Riksbank borrows foreign currency for a xed duration, leavingcollateral in the form of securities. This is a way to provide additionalliquidity through the use of existing securities.

2 A classic “ight to quality” arose and investors rejected securities ofmortgage institutions in favour of safe government securities. The highdemand for treasury bills resulted in a shortage situation that the Natio-nal Debt Ofce, in consultation with the Riksbank, tried to remedy.

3 The Swap Facility with Federal Reserve means that the Riksbankbriey borrow USD in exchange for SEK.

4 The Swedish Financial Supervisory Authority “Effekterna av destatliga stabilitetsåtgätderna”. Second Report in 2009. (Not translated toEnglish).




part invested in Riksbank certicates but mostly over-nightin ne-tuning operations, items that can be seen in theliability side.

The Riksbank’s assets and liabilitiesSEK billion

Assets Aug 31 -08 Dec 31 -08 Change

Gold 25 30 5

Foreign exchange reserves 174 200 26Lending in USD 0 196 196Lending in SEK 1 266 265Other assets 4 7 3Total assets 204 700 496

Liabilities

Banknotes and coins 107 112 5Fine-tuning operations 0 207 207Debt certificates issued 0 49 49Liabilities in SEK (Fed) 0 189 189Other liabilities 38 84 56Capital and reserves 59 59 0Total liabilities 204 700 496

Source: Sveriges Riksbank

The USD liquidity that the Riksbank added to the banks isshown under lending in USD, while the Riksbank’s funding,through the swap facility with Fed, can be seen under lia-bilities in USD. It is quite probable that the USD loan fromthe Riksbank has signicantly replaced the banks’ loss ofsecurities borrowing.

The palette of action by the Riksbank and the governmenthas made the banking sector able to obtain capital satis-factorily and thus to have been able to maintain lending to

rms and households.

The major banks’ borrowing from theRiksbankThe Money and Banking statistics present information onindividual banks that took part of the Riksbank’s lendingin the autumn. As mentioned above, it concerns loans inboth USD and SEK. The graph shows that all major bankshave raised loans in the Riksbank. Overall, their borrowingamounts to over SEK 400 billion of which approximatelyhalf are in foreign currency, mainly USD.

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Dec -08Nov -08Oct -08

Riksbank lending to major banksSEK billion



SEB SEB

SEB

SHB SHBSHB

Nordea NordeaNordea

Danske bank Danske bankDanske bank

Swedbank Swedbank Swedbank

Swedbank and Danske Bank Sweden Branch are the in-stitutions that have borrowed the most from the Riksbank.Handelsbanken is the only major bank that did not need toborrow in USD.

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Dec -08Nov -08Oct -08

Riksbank lending in USD to major banksSEK billion



SEB SEB SEB

Nordea Nordea

Danske bank Danske bank Danske bank

Swedbank Swedbank Swedbank

Nordea

What do statistics say on corporate creditcrunchBanking sector lending to the non-nancial corporate sectorthroughout 2008, including the fourth quarter 2008, hasbeen stable. On average, the value of loans increased byabout 1 percent per month. Does that mean that the dourheadlines about the credit collapse of the non-nancialcompanies are exaggerated? If you add the fact that the

Swedish companies actually have increased their depositsin the banking system during the same period, then theimage of a business sector that both can obtain loans frombanks and also have relatively large funds invested in bankaccounts, is reinforced.

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9

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Banks lending and deposits vis-a-vis non-financial corporations 2008Percent change compared to previous month



Lending

Deposits

In order to better form an opinion on any funding difcultiesfor the corporate sector, further information is needed abouttheir access to nancing abroad. Statistics Sweden’s balancesheet statistics show, among other things, the corporate



http://slidepdf.com/reader/full/the-swedish-economy 24/2624The Swedish economy – published March 2009

sector borrowing from abroad, both through securities andconventional bank loans. It appears that the value of bothtypes of loans has increased during the autumn of 2008. Atrst sight, it appears that the non-nancial companies havenot either been hit by a credit crunch from foreign creditors.Again, a weaker SEK increases the value of foreign currencyliabilities and distorts our interpretation somewhat. Butaside from the exchange rate, we have not seen any signi-cant net repayments of corporate borrowing abroad. Thisis not particularly surprising, since the stock of corporateloans is mainly long-term and very few loans seem to havematured during the autumn. It means, on the other hand,that the corporate sector may face problems later on withrenancing their existing loans.

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Q 4Q 3Q 2Q 1-08

Q 4Q 3Q 2Q 1-07

Q 4-06

Non financial corporations' loans from abroadSEK billion

Source: Non financial corporations – short term assets and liabilities

Short term Long term


It is difcult to deduce from the statistics whether there arecategories of companies that have had extraordinary dif-culties with the credit supply. Media often highlight howespecially small and medium-sized companies have haddifculties with the external funding. This means that theremay be a crowding out effect; where the major Swedishcompanies increasingly have turned to their Swedish homemarket for loans, thereby “taking precedence in the queue”.The Riksbank, in its publication “The Riksbank’s company

interviews in December 2008 – January 2009”, states thatevery two interviewed companies indicated that access toexternal nancing has deteriorated in the fourth quarter of2008. The Riksbank states, however, that most companiesinterviewed so far have managed to get loans in differentways. “This applies particularly to the large companies” theRiksbank points out. Again it is the larger companies that dominate as regardsthe ability to get capital through the issuance of securitiesabroad. The upturn in the fourth quarter of the companies’securities lending abroad is explained by that exchange rate

effect and a few major issues of a very limited number ofcompanies. It has apparently been “windows” on the capitalmarkets for new issues that probably have been open onlyfor a very small number of creditworthy companies. For the

vast majority of Swedish companies issuing securities ab-road no new borrowing has taken place. On the other hand,statistics give no evidence so far that the companies havebeen forced to repay their securities lending. What is not re-ected in statistics, of course, are those loans the enterpriseswould like to have, regardless of nancial means, but weredeclined by creditors.

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Q 4Q 3Q 2Q 1-08

Q 4Q 3Q 2Q 1-07

Q 4-06

Non financial corporations' securities issuesabroadSEK billion

Source: Non financial corporations – short term assets and liabilities

Certificates Bonds


In a second wave, the crisis comes back tothe financial sectorSome effects of the economic crisis in nancial aggregates

have been shown in this article. Rapid action by the govern-ment and the Riksbank has facilitated banks maintaining arelatively well-functioning credit market. Financial statisticsof banks and enterprises have thus come to reect just that.

The statistics show among other things that during Septem-ber to November 2008 there was a near-halt for securitiesborrowing abroad for the Swedish private sector. Banksamortized over SEK 400 billion during the period. In largepart this was replaced by loans from the Riksbank. It ap-pears that the international capital markets have easedsomewhat in late 2008 and early 2009.

The sharply weakened SEK since September last year hasmeant that both assets and liabilities in foreign currencyhave risen in value. This has for example offset the abovementioned amortizations of securities.

Various studies and the media testify that the non-nancialcompanies have been facing great difculties in gettingcredit during autumn and winter. This is most likely also afact. However, this is not particularly clear in the nancialstatistics.

The economic crisis will last for some time. Probably, it will

have larger impact on banks and corporate balance sheetsin the coming years. The crisis will most likely in the nearfuture have an impact on banking sector prots, not least byincreasing credit losses.



A bit speculatively, it can be said that the nancial crisisoriginated in the nancial sector. It went on very rapidly toalso become a real economic crisis. In a second wave, thecrisis comes back to the nancial sector with loan losses,prots dropping and probably declines in assets and liabi-lities. How this will turn out in statistics and in other waysremains to be seen.

It is noted that the impact of the crisis has been more clearlyreected in the real economic statistics. One possible con-clusion of the article can thus be that the nancial statisticsare not sufciently sophisticated to quickly reect the effectsof a nancial crisis but that it rather can contribute to the

analysis and also may indicate that, for example, nancialimbalances are built up nationally as well as globally.

In this article no review has been made of the Swedishbanks’ exposures to the Baltic countries, or of the banks’prots and losses incurred. In the current situation, theclaims of the Swedish banks in the Baltic area are aboutSEK 700 billion. There may be reasons to come back with

a more detailed description of developments in the Balticcountries and other more country-specic exposures from abalance sheet and income perspective.

Contact person: Anders Lindström, 08-506 949 09




Publisher:

Monica Nelson Edberg

For more information on this publication, please contact:

Leif Munters, editor 08-506 945 09

Caroline Ahlstrand 08-506 943 33

Bo Bergman 08-506 945 42

Claes-Håkan Gustafson 019-17 61 19

Hans-Olof Hagén 08-506 944 66

Eva Hagsten 08-506 942 27

Vera Norrman 08-506 943 04

Bo Sandén 08-506 946 94

Tomas Thorén 08-506 941 46

Co-authors:

Anders Lindström, Financial markets 08-506 949 09

Graphic format and web publishing:

Monica Andersson 08-506 943 62

Arne Orrgård 08-506 950 73

Inquiries also by e-mail: rst [email protected].

The Swedish economy – Statistical perspective

ISSN 1653–3828

URN:NBN:SE:SCB-2009-A28TI0901ENG_pdf (pdf)

the swedish economy

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