Swedbank Economic Outlook Update, PowerPoint

8/10/2019 Swedbank Economic Outlook Update, PowerPoint

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Table of Contents Executive Summary

Global Outlook:The global recovery is again losing steam Risk scenario: Downside risks dominate, but there is an upside Sweden: Adapting to a worse outlook EMU: Recovery paused, but probably still underway

US: Strong upswing in US growth, but there are limits

Emerging markets: Growth loses momentum Nordic area: Facing headwinds of various varieties Baltic countries: Cope with a weak external environment Appendix


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Executive Summary

The developed economies aregrowing apart, and emergingeconomies less alike

Downside risks dominate, butthere is an upside

Vulnerable Swedish and Baltic

economies cope with a weakexternal environment


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Risk scenario: Downside risks dominate, but there is an

upside Negative risks Deflation in the Eurozone remains

the largest risk.

Other negative risks are an

escalation of the Russia-Ukrainecrisis, an uncontrollable unravelling

of Chinese imbalances and volatilityin developed market financialsectors.

Positive risks

The strong policy action taken by theECB in combination with a

successful Asset Quality Review and

the bank stress test. The decrease in energy prices, most

notably oil price, could further boosthouseholds purchasing power.

0

10

20

30

40

50

60

70

Forecast risk scenarios (prob. in %)

Main

Main

Worse Wo

rse

Better

Better

Source: Swedbank

August '14November '14


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Sweden: Adapting to a worse outlook

Strong household demand makes up forfaltering export growth:

Export growth is affected by a weak

EMU and deteriorating Norwegian

economy Households will benefit from the

solid labor market developments andlower interest rates, as well as fromprevious tax rate cuts,

Monetary policy reacts strongly to threatof deflation

Faced with falling inflation and the

threat of deflation, it followed up its

50-basis-point cut of the repo rate inJuly by slashing the rate to zero inOctober and signalling its intensionto keep rates low until there are

significant signs of a pickup in prices

2.6

-0.3

1.5

2.1

2.6 2.9

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2011 2012 2013 2014 2015 2016

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

Public cons

Foreign balance

Stockbuilding

Gross fixed investment

Private cons

GDP

Sources: Statistics Sweden and Swedbank forecasts.

95

100

105

110

115

120

125

130

135

140

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

FX/FI: Inflation, the repo rate and the exchange rate

CPI y/y CPIF y/y Repo rate Krona (KIX-index, RH)

Sources: Riksbanken, Statistics Sweden and Swedbank


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Sweden: National accounts

Overall, we expect the Swedisheconomy to expand by 2.4% in 2015and 2.7% in 2016, compared with 2.2%this year.

A fine balance needs to be struck in

addressing the high household debtlevels

Fiscal policy grows in importance

while the government is weak

Swedbank's GDP Forecast - Sweden

Changes in volume, %

Households' consumption expenditure 2,1 2,8 (2,8) 2,5 (2,4) 2,1 (2,1)

Government consumption expenditure 1,6 1,0 (0,9) 2,1 (2,0) 1,9 (1,6)

Gross f ixed capital formation -0,1 4,3 (3,9) 5,6 (6,0) 5,8 (6,0)

private, excl. housing -1,1 -0,7 (-1,8) 3,8 (4,9) 6,4 (6,4)

public 0,2 5,7 (5,7) 5,1 (3,8) 3,4 (3,8)

housing 3,8 22,5 (22,3) 12,1 (10,6) 6,4 (6,4)Change in inventor ies1/ 0,0 0,2 (0,2) 0,0 (0,1) 0,0 (-0,0)

Exports, goods and services -0,5 2,2 (2,3) 3,8 (4,4) 5,6 (5,9)

Imports, goods and services -0,8 4,1 (4,1) 5,1 (5,7) 5,8 (6,2)

GDP 1,5 2,1 (1,9) 2,6 (2,6) 2,9 (2,7)

GDP, calendar adjusted 1,5 2,2 (2,1) 2,4 (2,3) 2,7 (2,5)

Domestic demand 1/ 1,3 2,5 (2,3) 3,0 (2,8) 2,8 (2,6)

Net exports 1/ 0,1 -0,6 (-0,6) -0,4 (-0,3) 0,1 (0,1)

1/ Contribution to GDP growth. So urces: Statistics Sweden and Swedbank

2016f2013 2015f 2014f


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Sweden: Sluggish demand dampens export

Slow recovery in export in 2015-2016 when the world market growthis expected to increase at a lowerrate.

Total export will grow below the trendof 5.6% (1993-2013) on average.

Loss of market shares continues unfavourable goods- and countrycomposition and increasing ULC Lower market growth in the Nordic and

EMU-countries (>55 % of Swedish export)

Surplus in foreign trade balancedeclines due to solid domestic

demand and sluggish export

performance.

-6

-4

-2

0

2

4

6

8

2011 2012 2013 2014 2015 2016

Sweden: Export, market growth and market shares

Market shares World market growth Export, %Source: Statistics Sweden

0

10

20

30

40

50

60

70

80

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Sweden: Foreign trade balance, Bn, SEK

2010 2011 2012 2013 2014Source: Statistics Sweden


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Sweden: Increased investment in housing

Investment in housing is the majordriver. Factors: Low interest rates

Solid disposable income growth

Lack of housing

Risks for supply restrictions on labor and

land use for housing

Higher taxes and higher amortizing ratecould dampen demand on housing

Increasing domestic demand and a

higher growth in services will driveinvestments in the private businesssector.

Low utilization rates and lowproduction will delay investments in

manufacturing.

Fiscal policy stimulus will strengtheninvestments in housing andinfrastructure.

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1

Sweden: Investment and export

Investment,EMU Swedish export growthSource: Statistics Sweden

-15

-10

-5

0

5

10

15

20

25

2011 2012 2013 2014 2015 2016

Sweden: Investment in different sectors, %

Total Business, excl housing Housing PublicSource: Statistics Sweden


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Sweden: Household consumption

Household consumption is the maindriver in Swedish economy

Real income developments support: Rising employment and hours worked

Low inflation Redistribution via fiscal policy to consumers

with high propensity to consume

Low interest rates

Dampened growth in the years ahead:

Higher taxes

Boom in durable goods behind us?

Savings remain high Measures to limit households debt

(amortization requirements?) add to savingsthat remains high

Redistribution of financial and real savings

Uncertain political situation

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

0,0

1,0

2,0

3,0

4,0

5,0

6,0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Sweden: Household income and consumption

Disposable income Household consumptionSavings ratio (RH) Interest rate costs (% of disp. inc) (RH)

Sources: Statistics Sweden and Swedbank

-20

-15

-10

-5

0

5

10

15

20

Q12006

Q42006

Q32007

Q22008

Q12009

Q42009

Q32010

Q22011

Q12012

Q42012

Q32013

Q22014

Sweden: Consumer Sector

Durable goods Non-durable goods ServicesSource: Reuters EcoWin


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Sweden: Balancing policy measures Household expectations in line with

the historical average despite strong labor market and income

developments

Tax hikes and measures toward householddebt dampen sentiment

Uncertainty is mainly seen in the view of theprivate economy (micro index)

Uncertain political situation

Are households getting nervous? Retail sales and car registrations have lost

some momentum

-50

-40

-30

-20

-10

010

20

30

40

50

-4

-2

0

2

4

6

8

10

Dec-05 Feb-07 Apr-08 Jun-09 Aug-10 Oct-11 Dec-12 Feb-14

PercentPercent

Sweden: Retail sales and car registrations, y/y

Retail Sales Car registrations (RH)

Source: Statistics Sweden

60

70

80

90

100

110

120

130

jan-05

jul-05

jan-06

jul-06

jan-07

jul-07

jan-08

jul-08

jan-09

jul-09

jan-10

jul-10

jan-11

jul-11

jan-12

jul-12

jan-13

jul-13

jan-14

jul-14

Sweden: Consumer Confidence Indicator

Consumer confidence indicator, SA Macro index Micro index

Source: Reuters EcoWin


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Sweden: Effects of amortization requirements Assumptions

Amortization of mortgage lending above LTVof 50%

Amortization rate for loans in the interval ofLTV 50% - 70% is 40 years; loans above

LTV 70% is 20 years

Household debt will increase by 4% at theend of 2015 and 2,5% at the end of 2016(5,7% presently)

Amortization requirements from 2015.

Interest rate costs in line with our interestrate forecast.

Amortization requirement intends:

Only new mortgage loans from 2015

All outstanding mortgage loans with anLTV above 50% (15% of mortgage debtoutstanding, SEK 366bn, September2014)

Gradually imposing over 2 years (SEK183bn per year)

Gradually imposing over 5 years (SEK73,2bn per year).

A mo rtizat io n in billio n SEK at: 2015 2016

A New loans 0,4 0,3

B A + existing loans 13,4 13,7

C A + outstanding loans 2yrs 6,9 7,0

D A + outstanding loans 5yrs 3,0 3,0

Source: Swedbank

Share o f dispo sable inco me, % 2015 2016

A New loans 0,0 0,0

B A + existing loans 0,7 0,7

C A + outstanding loans 2yrs 0,3 0,3

D A + outstanding loans 5yrs 0,1 0,1

Source: Swedbank


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Sweden: Effects of amortization requirements cont

Inclusion of only newly signed loans is expected to have limited effects

An immediate inclusion of mortgage debt with LTV above 50% is likely to have a severe impact Will significantly impair growth through lower consumption

Risk a severe fall in house prices

In the longer term it could affect housing negatively

Gradual introduction over 2 to 5 years likely. Affecting consumption negatively, but the effects are manageable

Uncertainty means that consumption is affected to a greater extent than savings

Reallocation of household savings from financial to real savings


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Sweden: Labor market has ongoing structural changes

Share of foreign-born participating inthe labor market continues toincrease

Positive development in 2014 for

foreigners; increased employmentand lower unemployment. However, unemployment is still high at 15.2%,

while among domestic born only 5.4%

Elderly (55-74 year) stay in the labor

market Since 2005, the number of elderly in the labor

market has increased by 120,000corresponding to a approx. 2.5 percentunemployment change

Tax and structural policy from the

new government somewhat negative.The positive effects of past mightdissipate.

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

68%

70%

72%

74%

76%

78%

80%

Participation rate (55-64) (LHS) Employment rate (65-75) (RHS)


Sweden: Participation rate (55-64yrs) & employment rate (65-74yrs)

64%

65%

66%

67%

68%

69%

70%

71%

72%

73%

74%

2005Q32006Q32007Q32008Q32009Q32010Q32011Q32012Q32013Q32014Q3

Sweden: Participation rate, domestic and foreign born

Participation rate, domestic born Participation rate, foregin born

Sources: Statistics Sweden and SwedbankSource:


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Positive development. 2014 more positive than expected.

Improvement is expected to flatten

out in 2016.

Unemployment stubbornly high aslabor supply continues to increase.

Unemployment approx. 0.5 p.p.higher compared to Riksbanksforecast.

Increase in labor costs remainsmuted, albeit increasing.

Sweden: Labor market forecast

5,0

5,5

6,0

6,57,0

7,5

8,0

8,5

9,0

9,5

10,0

4 200

4 400

4 600

4 800

5 000

5 200

5 400

Sweden: Employment, labor force & unemployment

Unemployment rate (%)

Employment

Labor force

Swb

estimate


2013 2014 2015 2016

Employment 1,0% 1,5% 1,3% 0,9%

labor force 1,1% 1,4% 1,0% 0,2%

Unemployement 8,0% 7,9% 7,6% 7,0%

Hours worked 0,4% 1,6% 1,3% 1,1%

Hourly wage 2,6% 3,0% 3,1% 3,4%

ULC 1,2% 1,7% 2,6% 2,2%

Source: SCB andhSwedbank


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5%

7%

9%

11%

13%

15%

1970 1980 1990 2000 2010 2020 2030 2040 2050

Sweden: Share 75+ 1970-2050

Actual


Forecast 2014

Forecast 2000

Forecast 2004

Forecast 2009

Note: Forecasts from SCB

Population growth approx. 100,000this year.

Statistics: Sweden has gradually

revised forecasts upwards.

Demographic challenges havesoften.

A positive factor for domesticdemand.

Might increase potential growth.

An argument for a more

expansionary fiscal policy.

Place increased demands onintegration and labor market policy.

Sweden: Demographics look much brighter

7 500 000

8 000 000

8 500 000

9 000 000

9 500 000

10 000 000

10 500 000

11 000 000

11 500 000

12 000 000

1970 1980 1990 2000 2010 2020 2030 2040 2050

Sweden: Total population 1970-2050

Actual

Forecast 2000

Forecast 2004

Forecast 2014


Forecast 2009

Note: Forecasts from SCB


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Sweden: Moderate inflation pressures going forward

Subdued inflation pressure fromimport prices. Low inflation in the Eurozone.

Gradual strengthening of the SEK (KIX-index), SEK weaker against the USD and

stronger against the EUR.

Commodity prices will rise slowly with:

Higher metal prices

Lower energy prices

Slowly rising domestic inflation.

Lower interest rates and low rental costshold back housing costs in 2014 2015. The

trend reverses in 2016.

Small increases in services costs during2014 and 2015. Price of services will,however, rise gradually due to higher wages.

Base effects contribute to higher year-on-year inflation during the fall.

Fiscal policy could have a majorimpact, mainly through hikes of

indirect tax rates.

-0,50%

0,00%

0,50%

1,00%

1,50%

2,00%

2,50%

3,00%

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

Sweden: Inflation development

CPIF Swedbank Riksbank, Oct

Sources: Swedbank, Statistics Sweden and Riksbanken

-15

-10

-5

0

5

10

15

Jan-06 Dec-06 Nov-07 Oct-08 Sep-09 Aug-10 Jul-11 Jun-12 May-13 Apr-14

Sweden: Inflation development per sector

Goods ex housing Services ex housing Housing

Source: Statistics Sweden


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Sweden: Fiscal policy under political uncertainty

The governments budget bill maynot pass through the parliament. Negative budget balance during forecast

period.

Parts or the entire budget may not pass

through the Parliament by December.

Fully financed budget bill with SEK25bn in higher expenditures and

SEK 25bn in higher revenues.

35,0

40,0

45,0

50,0

55,0

-3,0

-2,0

-1,0

0,0

1,0

2,0

3,0

4,0

5,0

6,0

06 07 08 09 10 11 12 13 14 15 16

Sweden: Fiscal policy (% of GDP)

Overall balance (LS) Revenues Expenditures Debt (Maastricht)



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Sweden: Budget Bill 2015 Expenditure and revenue

reforms

Reform Sum (SEK bn) Short-term effect

Labor market reforms, including infrastructure 7.8 Higher public consumption

Education 3.4 Higher public consumption

Health care, elderly care and retirees 8.3 Higher public and private consumption

Other expenditure reforms (gender equality, culture, e 6 Higher public consumption

Higher employers social contributions -11.2 Lower employment and lower private consumption

Lower earned income tax credit and higher income ta -4.3 Lower private consumption

Abolishment of tax deduction for private retirement sa -3.1 Lower private consumption

Other tax increases and expenditure reductions -6.9 Lower public and lower private consumption

Source: Ministry of Finance


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Sweden: Budget Bill 2015 Short-term effects

Redistribution from private to public consumption.

Redistribution from high to low income earners.

Neutral to marginally positive effect on Swedish growth in 2015. Redistribution from households with high income and high propensity to save to households with low income and high

propensity to consume


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Sweden: Budget Bill 2015 Long-term effects

Educational reforms increase long-term growth potential

Higher marginal taxes and higher employers social contributions may reduce employment

Time aspect: It takes a long time for educational reforms to contribute positively to growth,

while the potentially negative effects on employment from higher taxes effect potential growthimmediately


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Sweden Budget Bill 2015: Fiscal policy uncertainty &

monetary policy

Political turmoil causes uncertainty regarding the macroeconomic effects of the Budget Bill

If parts of the Budget Bill, or the full Budget Bill, do not pass through the parliament, fiscal

policy may become contractionary Expansionary fiscal policy can contribute positively to growth when monetary policy has

reached the Zero Lower Bound (see, e.g., Blanchard och Leigh 2013, Eichengreen andORourke 2012)


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Sweden: Forex and interest rate volatility expected

The krona weakens initiallyand then strengthens,especially against the euro.

The Policy rate stays low forlong until inflation firmly picksup.

-8,0

-6,0

-4,0

-2,0

0,0

2,0

4,0

6,0

8,0

10,0

12,0

FX: Exchange rate forecasts (change from Nov 4 in%)

2014 31 Dec

2015 30 Jun

2015 31 Dec

2016 30 Jun

2016 31 Dec

Sources: Reuters Ecowin and Swedbank's forecasts

95

100

105

110

115

120

125

130

135

140

-2,0

-1,0

0,0

1,0

2,0

3,0

4,0

5,0

6,0

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

FX/FI: Inflation, the repo rate and the exchange rate

CPI y/y CPIF y/y Repo rate Krona (KIX-index, RH)

Sources: Riksbanken, Statistics Sweden and Swedbank


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EURUSD has further to go but at a slower pace

EURUSD fair value suggest 1.23, butthe medium-term undervaluation gapis less now.

Relative growth, balance sheets and

interest rate differentials will continue

to support broad USD appreciationagainst the EUR.

Still, the EURUSD move has beenfast and the relative short-term macro

surprises as well as positioning could

imply some stickiness for thedownside.

Key game changers for the EUR arecredit growth and structural fiscal

policy.


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USD strength is broadening

We see a good chance for a first ratehike from Fed in H1 even if the Feddots at 3.75 % Fed Funds in 2017looks aggressive.

Fed will not be very bothered by

gradual appreciation of the dollar aslong as recovery in the Eurozone isthe main scenario, even if a strongerUSD will pressure inflation and

exports a bit.

A bigger risk is that higher rates hurtthe housing sector next year.

The USD is also supported bygeopolitical risk in Eastern Europe

and improved US terms of Trades

In historical terms the real USD TWIis still 15 % below its post-Bretton

Woods average.

Yellow line is FedFunds pricing Oct 30.Red is FOMC dots


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EURSEK to stay range bound

No case for a sustainable break-out of the9.00-9.50 range in the near term.

Rate spread is zero. Still SEK is preferredover EUR over time based onfundamentals and valuation.

The Riksbank will not tolerate EURSEKbelow 8.80 at this stage. Currencyinterventions are can not be excluded.

SEK is a high-beta play on the outlook forthe Eurozone and if the ECB is successfulor not.


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EURUSD has more downside but aslower pace we target 1.22 in 6mo.

USD is still cheap based on

fundamentals.

We have squared our long USDSEK,entered at 6.50, target 7.25 reached.

EURSEK is a high-beta trade on theEuro-growth outlook.

Lower EURSEK over time as

fundamentals still speak in favour SEK.EURSEK below 8.80 would result ininterventions from the Riksbank.

We look for USD strength againstcommodity currencies like AUD, NZD

and NOK. Terms of Trade will weaken commodity

currencies. Gradually slower Chinese growth(less capex), and supply keep pressuring the oil

price.

We target AUDUSD to 0.82 in 6mo.

Summary on FX

2014 11 04 1 month 3 month 6 month 12 month

USD/SEK 7,4082 7,46 7,44 7,54 7,54

EUR/SEK 9,2633 9,40 9,30 9,20 9,05

GBP/SEK 11,8440 11,90 11,92 11,95 11,91

NOK/SEK 1,0887 1,12 1,10 1,08 1,05

CHF/SEK 7,6849 7,77 7,62 7,54 7,36

CAD/SEK 6,5110 6,66 6,64 6,67 6,56

AUD/SEK 6,4622 6,49 6,47 6,41 6,18

NZD/SEK 5,74 5,82 5,65 5,66 5,43

JPY/SEK 6,5225 6,49 6,47 6,45 6,28

CNY/SEK 1,2115 1,21 1,22 1,25 1,26

RUB/SEK 0,1700 0,180 0,177 0,173 0,166LTL/SEK 2,6828 2,72 2,69 2,66 2,62

DKK/SEK 1,2445 1,26 1,25 1,24 1,22

PLN/SEK 2,1895 2,21 2,16 2,16 2,15

EUR/NOK 8,5089 8,40 8,45 8,50 8,60

USD/NOK 6,8046 6,67 6,76 6,97 7,17

EUR/USD 1,2504 1,26 1,25 1,22 1,20

EUR/GBP 0,782 0,790 0,780 0,770 0,760

EUR/CHF 1,2054 1,21 1,22 1,22 1,23EUR/JPY 142,03 145 144 143 144

EUR/PLN 4,22 4,25 4,30 4,25 4,20

EUR/RUB 54,50 52,29 52,50 53,07 54,60

USD/JPY 113,58 115,00 115,00 117,00 120,00

USD/CAD 1,1378 1,12 1,12 1,13 1,15

AUD/USD 0,87 0,87 0,87 0,85 0,82

NZDUSD 0,77 0,78 0,76 0,75 0,72

GBP/USD 1,5986 1,59 1,60 1,58 1,58

Swedbanks FX forecasts


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Global view

07/11/2014


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Swedbank

EMU: Recovery paused, but probably still underway

Disappointing lack of growth, weakerthan business surveys suggested. Germany and Spain in the lead

France and Italy struggle to take off

Arguments for continued upswing: Retail sales have been growing at 2% rate.

Unemployment is falling almost everywhere.

ECB has launched forceful stimulus measures

(zero rates, TLTROs and asset purchases).

Euro has weakened.

Most banks passed the stress test/AQR. Private sector consolidation is well ahead.

Stronger growth in the US.

Less fiscal tightening ahead, a budget

compromise seems to have been reachedbetween EU and France/Italy.

Wage and price inflation will remain low, butdeflationary spiral not likely

We revise down growth projections onweak short-term data, but stick to our

overall view on a cyclical upswing.

-5

-3

-1

1

3

5

7

37,5

42,5

47,5

52,5

57,5

62,5

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

EMU - PMI vs. GDP

Composite PMI GDP

Source: Reuters EcowinSource:

30

35

40

45

50

55

60

65

2007 2008 2009 2010 2011 2012 2013 2014

EMU: Composite PMI

Germany Spain France Italy

Source: Reuters Ecowin


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Eurozone vs Japan in the 1990s

Similarities Shrinking and ageing labor force.

Declining volumes of bank lending, modestgrowth of money supply

Differences Private debt level much bigger in Japan in

the 1990s, so deleveraging in thedeflationary environment much more painful.

Eurozone banks balance sheets have beenless damaged by asset price declines thantheir Japanese counterparts in the 90s.

JP over-invested during the bubble period,the EZ as a whole has not seen a similarsurge in the inv/GDP ratio .

Deflationary pressures in the EZ in 2014largely due to external factors (stronger

euro, cheaper energy) as for JP it was thecollapse of the money markets and thebanking sector.

Still, appropriate policy needed toavoid stagnation in the EZ

0

10

20

30

40

50

60

Dec-02 Apr-04 Aug-05 Dec-06 Apr-08 Aug-09 Dec-10 Apr-12 Aug-13

% of GDP

EMU: Major central bank balance sheets

ECB BoE BoJ Fed


-1

0

1

2

3

4

5

-20

-10

0

10

20

30

40

1997 2000 2003 2006 2009 2012

EMU: Inflation and inflation expectations

Infl.expectations, next 12 months (LS)HICP, excl energy and unprocessed food, YoY (RS)HICP, YoY (RS)

Sources: Eurostat and DG ECFIN


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Swedbank

US: Strong upswing in growth, but there are limits

The US economy is firing up. The recovery in the second and third quarters

has been surprisingly strong.

Growth is broad-based, with private sector takingthe lead and the fiscal policy getting out of theway.

Competitiveness is improving due to low wageincreases, cheap energy and still moderatelypriced dollar.

Lack of reforms and public investmentslimit growth potential

Inefficient tax system, crumbling infrastructureand underinvestment in public education are thekey US challenges.

Decline in labor force participation not likely to

fully recover.

Growth forecast at 3% in 2015 before decliningtoward 2% in 2016.

20

25

30

35

40

45

50

55

60

65

70

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

USA: ISM Purchasing Managers' Index - Manufacturing

PMI-Total PMI-Employment PMI-NewOrders

Source: ISM

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

-0,4

-0,2

0,0

0,2

0,4

0,6

0,8

1,0

1,2

Q1-10 Q4-10 Q3-11 Q2-12 Q1-13 Q4-13 Q3-14 Q2-15 Q1-16 Q4-16

USA: Real GDP growth (in %)

USA (q/q) US (y/y, RS)

Sources: Reuters Ecowin and Swedbank's forecast


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Swedbank

US: Monetary policy normalisation underway

The end of unconventional monetarypolicy instruments Solid economic growth and labor market

improvement supported an end to quantitativeeasing in October

However, price pressures remain limited, and

wage growth muted.

We expect the first hike of feds fundsrate in mid-2015. Concerns of prematurely tightening policies is

weighted against the risk of asset bubbles

building up. Due to possible negative feedback from the rest

of the world, the hiking pace is expected to bemoderate, with the feds funds rate at 1.75% atend-2016.

54

56

58

60

62

64

66

-6

-4

-2

0

2

4

6

8

10

12

2000 2002 2004 2006 2008 2010 2012 2014

US: Labor market data

Participation rate (RS) Unemployment rate (%, sa) Empl growth (%, y/y)


0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

US: Core inflation and wages (%)

PCE core CPI core Average hourly earnings



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Swedbank

UK: Stable growth despite the fragile Eurozone

The recovery is expected to continue. GDP-growth more balanced than prior

statistics have indicated, Office for NationalStatistics has revised investments upward.

Sentiment indicators have dampened lately,but stable growth is foreseen.

Housing market gets some relief. Weak global growth, in the Eurozone among

others, may lower exports in the mediumrun.

Members of BoEs MPC at different

views CPI inflation has fallen but is expected to

increase over time.

The first bank rate hike to 0.75% is postponedto Q2 2015 from Q1 in the August forecast.

Sterling appreciation w.r.t. the euro goingforward

Risks: uncertainty relating to generalelection in the spring 2015 anddownside risks to foreign trade.

0

1

2

3

4

5

6

0

1

2

3

4

5

6

Jan-02 May-03 Sep-04 Jan-06 May-07 Sep-08 Jan-10 May-11 Sep-12 Jan-14

UK: Inflation and wage growth

Average weekly earnings, whole economy, regular pay, y/y, MA3mCore CPI, y/y, MA3mCPI, y/y, MA3m


0,00

0,50

1,00

1,50

2,00

2,50

Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15 Feb-16 Sep-16

UK: Rate path

Official Bank Rate Short Sterling Swedbank

Sources: Swedbank, Bank of England and Bloomberg


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Swedbank

Japan: Weaker than anticipated

Half-way of achieving the objectiveof 2% inflation and growth.

But increasing signs of weakness inthe economy following the sales-taxhike in April.

Growth around 1% going forward onstronger investments and exportspicking up slowly.

Next VAT increase still likely tohappen at the end of 2015, but willbe decided in early Dec.

As interest rate differentials betweenthe US and Japan widen, the USD

will continue its outperformanceagainst the yen.

-10

-8

-6-4

-2

0

2

4

6

8

10

-50

-40

-30-20

-10

0

10

20

30

40

50

2008 2010 2012 2014

Japan: Main economic indicators, y/y, %

GDP (RS) Exports of goods and services (LS)

Industrial production (LS) Retail sales (RS)

Source: Reuters EcoWin

-30

-20

-10

0

10

20

30

40

50

60

-3

-2

-1

0

1

2

3

4

5

6

2009 2010 2011 2012 2013 2014

Japan: Prices, y/y, %

CPI less fresh food (LS) REER, JPY (RS)

Monetary base, sa, JPY (RS)

Sources: Reuters EcoWin and Swedbank


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Swedbank

China growth has lost momentumbut is kept up by selective stimulus.

Growth will get a boost by lower oil

prices and slower inflation in India.

Brazil is weak on all fronts and inhuge need of structural reforms.

Russia slips into recession, butreserves help.

Emerging markets: Growth loses momentum


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Swedbank

The Brazilian economy is instagflation.

GDP growth is negative and inflation

is high and increasing.

Economic growth is weak on allfronts: Weaker demand from China.

Industrial production has been negative in2014 and PMI is below 50.

Retail sales is negative, credit growth is

weak and consumer confidence the lowestsince 2009.

The current account deficit is still

high, making the economyvulnerable for a setback in risk

sentiment. The need for structural reforms is

huge and the political challenges areimmense.

Brazil: Negative on all fronts

-2

0

2

4

6

8

10

12

14

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percen

t

Brazil: Retail sales, constant prices, % yoy

Sources: Reuters EcoWin and Swedbank Note: 3m moving average

-4

-2

0

2

4

6

8

10

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percent

Brazil: Real GDP, % yoy



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Swedbank

Growth indicators are sluggish butwe expect stronger sentiment on theback of new political reforms.

However, we dont expect any quick

fixes. Lower oil prices will boost demand

and help to narrow the currentaccount deficit.

Sharp fall in inflation.

A clear shift in monetary policy since lastyear with a new central bank governor.

Lower food prices after sharp rain fall.

Lower oil prices will help reaching the newinflation target (8% Jan 2015, 6% Jan 2016).

India: The hard work has started

6

6,5

7

7,5

8

8,5

9

9,5

10

10,5

11

11,5

2012 2013 2014

Percen

t

India: Consumer prices, urban and rural


2

4

6

8

10

12

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percent

India: Real GDP, % yoy



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Swedbank

Growth has lost momentum but iskept up by selective stimulus.

Headline GDP is out of line with

other statistics.

Net exports is the only driver in anotherwise weak economy.

House prices are falling on a broadbasis.

Many activity indicators are weak

and commodity prices are falling.

Low inflation makes it easier for thegovernment to stimulate economy.

We believe the adjustment to

structurally lower growth will beslower than our earlier forecasts.

China: Policy slows downward trends

2500

3000

3500

4000

4500

5000

5500

7

9

11

13

15

17

19

Nov-09May-10 Nov-10May-11 Nov-11May-12Nov-12May-13Nov-13May-14

Percent

Industrial production (LHS) Steel prices (RHS) (CNY/Metric ton)


China: Industrial production (% yoy) and steel prices

10

15

20

25

30

35

40

45

50

55

60

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Perce

nt

Sources: Reuters EconWin and Swebank

China: Investment in Fixed Assets, Current prices, % yoy

R i T li i i b h l


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Swedbank

Russia: To slip into recession, but reserves help

Shallow recession, with very faint growthreturning towards the end of 2015 GDP up 0.2% in 2014 (as falling imports

briefly fill in for collapsing investments andretreating consumption), but to fall 0.6% in2015, only faint 1% recovery in 2016.

RUB weakness cushions lower oil prices forthe budget and supports non-oil exports; yet,negative feedback loops via higher inflationand less consumer spending.

Import substitution to create some jobs, butlabor market to continue cooling. Real wage

growth already negative. Reserve levels unable to balance the lack of

foreign financing; banking/ investmentsqueeze to stun medium term growth

Aim to stick with current economic policy. Recovery hinges upon stabilisation of the

RUS/UKR conflict by mid 2015, followed byless sanctions and some return of westerninvestors. Fiscal rule and inflation targetingoutlook is retained. RUB to weaken but lessfast amid temporary gains.

In negative scenarios everything goes.

Very disappointing long term outlook To boost growth, oil prices must rise sharply

and/ or corruption wane... neither is likely.

-12

-8

-4

0

4

8

12

-60

-40

-20

0

20

40

60

2007 2008 2009 2010 2011 2012 2013 2014

Russia: Annual growth of GDP components, %

GDP (RS) Investments Households Exports Imports


-100

-80

-60

-40

-20

0

20

40

60

80-80

-60

-40

-20

0

20

40

60

80

100

2009 2010 2011 2012 2013 2014

Russia: Annual growth of rouble & oil price, %

Brent Oil, USD USD/RUB (RS, reversed)Source: Reuters Ecowin

Oil L i h i i i l b l h


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Swedbank

Oil: Lower price has positive impact on global growth

A fall in oil price by 20% increasesglobal consumption by 0.2% in 2015and by 0.2-0.4% 2016.

Biggest winners are emerging

markets, countries with net import ofoil.

Lower bill for oil import willstrengthen external balanceparticularly in countries with high oil

intensive demand. Strengthening of public finance when

the subvention rate decline mainly inthe emerging markets.

0 1 2 3 4 5 6 7 8

USA

China

Japan

India

South Korea

Source: IEA

Commodities: Biggest net importers of oil, million barrels per day


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Swedbank

Nordic area: Facing headwinds of various varieties

Norway: The end of the investmentcycle in both energy extraction andhousing construction is aggravatedby a falling oil price. We revise downgrowth forecasts by 0.5 ppt in both

2015 and 2016 to 1.5% and 1.8%respectively.

Denmark: Recovery threatened byEurozone weakness and domestic

imbalances. Gradual recovery withgrowth at 1.7% in 2015 and 2.2% in2016.

Finland: The Finnish economy isstruggling with structural adjustment

while being relatively hard hit by theslowing Russian economy andsanctions. A 3-year long recession is

expect to end in 2015 with realgrowth at 0.4% and 1.3% in 2016.

N Sl d ti f b th il & h h ld


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Swedbank

Norway: Slowdown continues for both oil & households Modest economic growth continues:

High Q2 growth in Mainland economy set to bereversed in Q3.

Norges Banks Regional network confirmsmodest growth and outlook.

Weak retail sales in Q3 in contrast to renewedhouse price growth.

Oil investments projected to fall, loweroil prices likely to exacerbate downturn.

Norges Bank will have to reconsiderthe 1.5% policy rate next year. Bank projected unchanged rate in September,

no bias towards cut. FRAs now imply high probability of cut.

Bank is reluctant to cut for fear of fuelling houseprice growth and debt build up, but willeventually have to reconsider.

We reduce our growth projections to

1.5% in 2015, risk still on downside. FRAs and NOK have fallen sufficiently

vs. fundamentals.

-3

-2

-1

0

1

2

3

4

5

6

-1,5

-0,5

0,5

1,5

2,5

3,5

2008 2009 2010 2011 2012 2013 2014 2015

Norway: Actual vs. reported growth q/q

GDP Mainland ex. electr. q/q (RH) Norges Bank forecast (RH)

Regional Network reported/exp growth

Sources: Reuters Ecowin and Swedbank

-4%

-2%

0%

2%

4%

6%

8%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Norway: Contributions to GDP

Private cons Public exp

Oil invest Mainland business inv

Housing InventoriesNet export. ex oil, ships, plat. GDP MainlandSource: Statistics Norway

Fi l d O l d t th t ti l


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Swedbank

Finland: Only modest growth potential

Industrial output has failed to recover inrecent months. Energy and construction sector had the most

negative impact.

labor productivity growth has picked up recentlybut has lagged behind its main trading partners.

Services sector turnover has increased

in 2014. Contributed mainly by IT, financial and real

estate sector. At the same time, public sector services have not

picked up.

Investments still decreasing. Especially private investments.

Government contribution will stay weak due tothe need for budget consolidation.

Government is consolidating itsfinances. Budget deficit will be reduced with the price of

increasing debt.

Unemployment rate has increased andnominal growth of wages decelerated. Industrial sector wages still decreasing.

Sluggish improvement of householddisposable income inhibits consumption Households disposable income has increased

less than its loan debt, increasing their

indebtedness ratio close to 120%.

-10

-5

0

5

10

15

2011 2012 2013 2014

Finland: Industrial output & services' turnover, y/y, %

Industrial output Services' turnover

Source: Statistics Finland

3

2.6

-1.5-1.2 -0.2

0.4

1.3

-2

-1

0

1

2

3

2010 2011 2012 2013 2014f 2015f 2016f

Finland: Will exit its 3-year recession in 2015, GDP %

Sources: Statistics Finland and Swedbank

Denmark: External weakness & domestic imbalance threaten


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Swedbank

1,3

-1,3

0,5

-0,3 -0,3 -0,5 -0,2

0,1

-0,3

0,80

0,1 0,2

-3

-2

-1

0

1

2

3Denmark: Contribution to growth (s.a. qoq in %)

Inventories InvestmentPublic consumption Household consumptionNetexports GDP

Source: Denmark Statistics

35000

40000

45000

50000

55000

60000

94

96

98

100

102

104

106

Jan-05 Feb-06 Mar-07 Apr-08 May-09 Jun-10 Jul-11 Aug-12 Sep-13

Denmark: Competitiveness and exports

REER (ULC) Export (m Dkk, RS)

Sources:BIS and Statistics Denmark.

Denmark: External weakness & domestic imbalance threaten

growth Positive but weak growth in the last 4

quarters Household sentiments is strengthening

However, deflation is expected, and

the National Bank has intervened in the

currency market to weaken the krone.

German demand and house priceswill determine recovery We revise down our growth forecast this

year due to revision of data.

Looking forward we expect a continued, butgradual recovery, with real growth rates ofabout 2% in 2015 and 2016.

Growth in real income and employment willsupport domestic demand, but

household indebtedness could endangerboth consumption and financial sector

stability.

Ultimately external demand, primarily fromthe Eurozone, will determine the speed ofrecovery.

Th B l i


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Swedbank

The Baltics

Estonia: Economic growth pickingup.

Latvia: Shifting down a gear.

Lithuania: Steady growth, lowinflation.

Estonia: Economic growth picking up


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Swedbank

Estonia: Economic growth picking up GDP growth revised up for 2014 due to

data revisions.

Growth will accelerate in 2015-2016 asexternal demand will pick up.

Investment growth will remain modest.

Growth of corporations loan portfolio hasaccelerated in 2014.

Public investments will fall in 2015-2016.

Inflation will accelerate in 2015-2016. Supported mostly by higher prices of food,

weaker euro, and an increase in excise tax

rates.

Wage growth will remain fast asworking-age population and the numberof unemployed will decrease further.

Consumers will also benefit from thesubstantial reduction in labor taxes in2015.

10.0%

8.6%

7.5% 7.2% 7.1%

-2%

0%

2%

4%

6%

8%

10%

12%

2012 2013 2014f 2015f 2016f

Estonia: Labour market indicators and inflation

Unemployment rate CPI growth, YoY Net wage real growth, YoY

Sources: Statistics Estonia, Swedbank

8.3

4.7

1.6 2.0 2.5 3.0

-4

-2

0

2

4

6

8

10

2011 2012 2013 2014f 2015f 2016f

Estonia: Contribution to GDP growth

Households Government InvestmentsNet exports Inventories GDP growth, % (Aug.)GDP growth, % (Nov.)

Sources: Statistics Estonia and Swedbank

Latvia: Shifting to a lower gear


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Swedbank

Latvia: Shifting to a lower gear

Moderate growth in 2014-16. Historical data revisions imply a bit slower

growth in 2014 (on the side of privateconsumption and inventories), but the storyremain the same.

Exports to Russia continue to falling, butcompensated by decent export growth toother markets. Weaker-than-expectedgrowth in the Eurozone will be outweighedby (i) relatively strong growth in some otherEU countries and (ii) resuming steelproduction of Liepajas Metalurgs (newowner).

Growth to become more balanced graduallywith exports and investments picking up in2015-2016

Stagnating employment, but strongreal wage growth. Very little job creation, but the

unemployment rate to continue falling due toemigration and demographics.

Strong wage growth to slow down in 2015,but exceeding productivity thus posing risksto competitiveness going forward.

Inflation to pick up in 2015 due to electricitytariff hikes, but it will be lower thananticipated before due to fallen oil and foodprices.

No major change in economic policyafter parliamentary elections.

-20

-10

0

10

20

30

40

2011 2012 2013 2014

Latvia: GDP annual growth, %

GDP

Householdconsumption

Gross fixed capitalformation

Exports

Imports

Source: CSBL

-24

-16

-8

0

8

16

24

2005 2007 2009 2011 2013

Latvia: Labour market indicators, %

Unemploymentrate

Employment, y/y

Real net wage,YoY

Source: CSBL

Lithuania: Steady growth after deceleration in 2014


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Swedbank

Lithuania: Steady growth after deceleration in 2014

A slight downward revision of growthforecast for 2015; growth accelerationstill expected in 2016. Household consumption will be the main

driver of growth. It will be supported by animproving situation in the labor market, lowinflation and accelerating growth of credit

portfolio. Growth of investments will decelerate in

2015 due to weaker business confidenceand worsened opportunities for exports, butwill pick up in 2016 on the back of EUstructural funds and the economic situationin foreign markets is likely to improve.

Exports will be negatively affected by tradebans to Russia and continued weakness in

euro zone. Inflation next year will be lower than

previously expected, but will pick up in2016. Declining energy prices and contained labor

cost growth will keep inflation low this andnext year.

Higher inflation towards the end of 2015 andin 2016 due to faster increase of labor costs,more expensive food products and cheapereuro.

Wage growth will accelerate in 2016 Real net wage growth will be supported by

low inflation, an increase in non-taxableincome threshold and the minimum monthlywage; upcoming parliamentary election in

2016 will probably also encourage thegovernment to start increasing public sectorwages.

-2

0

2

4

6

2010 2011 2012 2013 2014

Lithuania: Prices of goods & services, y/y, (HICP), %

Annual inflation Prices of goods Prices of services

Source: Eurostat

1.6

6.1

3.83.3 3.0 3.3

3.8

-4

-2

0

2

4

6

8

2010 2011 2012 2013 2014f 2015f 2016f

Lithuania: Contributions to GDP growth, p.p.

Household consumption Government consumption

Investment (excl.invent.) Inventories

Net export GDP growth, %

Source: Statistics Lithuania and Swedbank's forecasts

A di K i i di t &


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Swedbank

Appendix: Key economic indicators &

national accounts for Swedbankshome markets

Sweden: Key economic indicators


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Swedbank

Sweden: Key economic indicators

Key Economic indicators, 2013-20161/

2012 2013 2014f 2015f 2016f

Real GDP (calendar adjusted) 0,1 1,5 2,2 2,4 2,7

Industrial production -3,0 -1,3 0,3 3,6 4,5

CPI index, average 0,9 0,0 -0,2 0,7 2,0

CPI, end of period -0,1 0,1 -0,4 1,5 2,5

CPIF, average2/ 1,0 0,9 0,4 1,0 1,6

CPIF, end of period 1,0 0,8 0,3 1,4 1,8Labour force (15-74) 0,9 1,1 1,4 1,0 0,2

Unemployment rate (15-74), % of labor force 8,0 8,0 8,0 7,7 7,0

Employment (15-74) 0,7 1,0 1,5 1,3 0,9

Nominal hourly w age w hole economy, average 3,0 2,6 3,0 3,1 3,4

Savings ratio (households), % 12,4 12,4 12,1 12,2 12,2

Real disposable income (households) 4,2 2,5 2,4 2,9 2,0

Current account balance, % of GDP 5,7 5,2 4,3 3,8 3,1

General government budget balance, % of GDP 3/ -1,3 -1,2 -2,3 -1,6 -1,0

General government debt, % of GDP 4/ 36,9 39,5 40,5 40,6 40,0

1/ Annual percentage growth, unless otherwise indicated. 2/ CPI with f ixed interest rates.

3/ As measured by general government net lending. 4/ According to t he Maas tricht c rit erion.


Swedbank's GDP Forecast - Sweden

Changes in volume, %

Households' consumption expenditure 2,1 2,8 (2,8) 2,5 (2,4) 2,1 (2,1)

Government consumption expenditure 1,6 1,0 (0,9) 2,1 (2,0) 1,9 (1,6)

Gross f ixed capital formation -0,1 4,3 (3,9) 5,6 (6,0) 5,8 (6,0)

private, excl. housing -1,1 -0,7 (-1,8) 3,8 (4,9) 6,4 (6,4)

public 0,2 5,7 (5,7) 5,1 (3,8) 3,4 (3,8)

housing 3,8 22,5 (22,3) 12,1 (10,6) 6,4 (6,4)

Change in inventor ies1/ 0,0 0,2 (0,2) 0,0 (0,1) 0,0 (-0,0)

Exports, goods and services -0,5 2,2 (2,3) 3,8 (4,4) 5,6 (5,9)

Imports, goods and services -0,8 4,1 (4,1) 5,1 (5,7) 5,8 (6,2)

GDP 1,5 2,1 (1,9) 2,6 (2,6) 2,9 (2,7)

GDP, calendar adjusted 1,5 2,2 (2,1) 2,4 (2,3) 2,7 (2,5)

Domestic demand 1/ 1,3 2,5 (2,3) 3,0 (2,8) 2,8 (2,6)

Net exports 1/ 0,1 -0,6 (-0,6) -0,4 (-0,3) 0,1 (0,1)

1/ Co ntribution to GDP growth. So urces: Statistics Sweden and Swedbank

2016f2013 2015f 2014f

Interest and exchange rate assumptions

Outcome Forecast

2014 2014 2015 2015 2016 2016

05-nov 31 Dec 30 Jun 31 Dec 30 Jun 31 DecInterest r ates (%)

Policy rate 0.25 0.00 0.00 0.00 0.00 0.50

10-yr. gvt bond 1.22 1.40 1.90 2.05 2.20 2.30

Exchange rates

EUR/SEK 9.2 9.3 9.1 9.1 9.0 8.9

USD/SEK 7.4 7.4 7.5 7.5 7.6 7.3

KIX (SEK) 1/ 109.8 110.7 109.0 108.6 108.2 106.7

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

Sources: Reuters Eco win and Swedbank

Estonia: Key economic indicators


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Swedbank

Estonia: Key economic indicators

ESTONIA: Key economic indicators, 2013-20161/

2013

Real GDP grow th, % 1.6 2.0 (0.8) 2.5 (2.3) 3.0 (3.0)

Household consumption 3.8 3.6 (3.5) 3.8 (3.5) 3.4 (3.8)

Government consumption 2.8 0.5 (1.2) 1.0 (1.2) 1.0 (1.4)

Gross fixed capital formation 2.5 2.5 (0.0) 3.0 (4.0) 4.5 (5.5)Exports of goods and services 2.6 1.5 (1.0) 2.0 (2.5) 4.0 (4.0)

Imports of goods and services 3.1 1.0 (2.0) 2.5 (3.7) 5.0 (5.3)

Consumer price grow th, % 2.8 0.0 (0.3) 1.3 (2.5) 2.0 (2.7)

Unemployment rate, % 2/ 8.6 7.5 (7.7) 7.2 (7.6) 7.1 (7.2)

Real net monthly w age grow th, % 7.5 5.2 (5.9) 7.4 (7.5) 6.5 (6.3)

Nominal GDP, billion euro 18.7 19.5 (19.1) 20.6 (20.2) 21.9 (21.5)

Exports of goods and services (nominal), % grow th 3.6 1.8 (1.8) 2.5 (3.6) 5.1 (5.5)

Imports of goods and services (nominal), % grow t 2.7 0.0 (1.7) 2.5 (4.7) 5.6 (6.8)

Balance of goods and services, % of GDP 1.2 2.5 (1.8) 2.7 (1.7) 3.0 (1.5)

Current account balance, % of GDP -1.4 -0.6 (-1.3) -0.6 (-1.7) -0.5 (-2.0)

Current and capital account balance, % of GDP 0.0 -0.2 (1.6) 1.8 (1.3) 2.0 (1.2)

FDI inf low , % of GDP 3.6 4.1 (2.1) 3.9 (2.5) 3.7 (2.3)

Gross external debt, % of GDP 93.6 90.4 (85.5) 86.1 (82.5) 81.6 (79.6)General government budget balance, % of GDP 3/ -0.5 -0.5 (-0.5) -0.4 (-0.4) -0.2 (-0.2)

General government debt, % of GDP 10.1 10.0 (10.0) 9.8 (9.8) 9.5 (9.5)

1/ August 2014 forecast in parenthesis

2/ According to Labour force survey

3/ According to Maastricht criterion

2014f 2015f 2016f

Sources: Statistics Estonia, Bank of Estonia, Sw edbank

Latvia: Key economic indicators


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Swedbank

Latvia: Key economic indicators

LATVIA: Key economic indicators, 2013-2016

1/

2013

Real GDP grow th, % 4.2 2.3 (2.5) 2.6 (2.6) 3.5 (3.5)


Government consumption -4.2 2.6 (1.0) 1.6 (1.6) 1.0 (0.8)

Gross f ixed capital formation -5.2 2.5 (2.0) 2.0 (2.0) 7.0 (7.0)

Exports of goods and services 1.5 0.9 (0.5) 3.0 (3.0) 4.5 (4.5)






Exports of goods and services (nominal), % grow th 2.2 0.5 (1.0) 4.9 (5.4) 6.6 (7.1)

Imports of goods and services (nominal), % grow th 0.9 0.0 (2.7) 4.8 (5.7) 8.1 (8.3)

Balance of goods and services, % of GDP -3.3 -2.9 (-2.8) -2.8 (-2.9) -3.7 (-3.6)

Current account balance, % of GDP -2.3 -2.1 (-2.0) -2.1 (-2.2) -2.9 (-2.9)

Current and capital account balance, % of GDP 0.1 0.5 (0.6) 1.0 (0.9) -1.8 (-1.8)

FDI inflow , % of GDP 2.9 1.2 (1.6) 2.3 (2.3) 2.9 (2.9)

Gross external debt, % of GDP 131.3 130.4 (130.3) 124.2 (124.6) 119.8 (119.8)General government budget balance, % of GDP 3/ -0.9 -1.0 (-1.3) -1.5 (-1.5) -0.8 (-0.8)


Sources: CSBL and Swedbank.

1/August 2014 f orecast in parenthesis, 2013 f igures are updated according to new ESA2010 methodology.2/According to Labour f orce survey.3/According to Maastricht criterion.

2014f 2015f 2016f

Lithuania: Key economic indicators


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Swedbank

Lithuania: Key economic indicators

LITHUANIA: Key economic indicators, 2013-2016 1/

2013

Real GDP grow th, % 3.3 3.0 (3.0) 3.3 (3.5) 3.8 (3.8)


Government consumption 1.8 2.0 (2.0) 2.5 (2.5) 3.0 (2.7)

Gross f ixed capital formation 7.0 6.5 (6.5) 6.0 (7.0) 10.0 (10.0)Exports of goods and services 9.4 -1.0 (-1.5) 3.5 (3.5) 5.0 (5.0)






Exports of goods and services (nominal), % grow th 8.0 -2.5 (-4.0) 4.5 (4.5) 7.0 (8.0)

Imports of goods and services (nominal), % grow th 7.5 1.0 (0.0) 5.5 (5.5) 8.0 (9.0)

Balance of goods and services, % of GDP 1.3 -1.6 (-2.3) -2.4 (-3.1) -3.2 (-3.9)

Current account balance, % of GDP 1.6 -0.7 (-1.8) -1.5 (-2.0) -2.1 (-2.4)

Current and capital account balance, % of GDP 4.6 1.6 (0.5) 0.8 (0.3) 0.2 (-0.1)

FDI inf low , % of GDP 1.5 2.5 (2.5) 3.0 (3.0) 4.0 (4.0)

Gross external debt, % of GDP 69.7 66.5 (67.1) 65.0 (65.3) 62.7 (62.6)

General government budget balance, % of GDP 3/ -2.6 -1.3 (-2.1) -1.3 (-1.2) -1.0 (-0.5)


1/ August 2014 f orecast in parenthesis

2/ According to Labour f orce survey

3/ According to Maastricht criterion; Nov ember f orecasts

according to ESA'2010, f orecasts in parenthesis according to

ESA'95

2014f 2015f 2016f

Sources: Statistics Lithuania,

Bank of Lithuania and Swedbank.

Contact information


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Swedbank

Contact informationMacro Research Strategy

Olof Manner Magnus Alvesson Helene Stangeb ye Olsen Anders Ekl f ol of.manner@swedb ank.se magnus.al vesson@swedb ank.se hso@swedb ank.no anders.ekl of@swedb ank.se

Head of Macro Head of Economic Forecasting Reserach Assistant Chief FX Strategist

+46 (0)70 567 9312 +46 (0)8 5859 33 41 +47 23 23 82 47 +46 (0)8 700 91 38

Anna Fellnder Knut Hallberg Liis Elmik Jerk Matero

[email protected] [email protected] [email protected] [email protected]

Group Chief Economist Senior Economist Senior Economist Chief IR Strategist

+46 (0)8 5859 39 34 +46 (0)8 700 93 17 +372 888 72 06 +46 (0)8 700 99 76

Harald-Magnus Andreassen Jrgen Kennemar Teele Aksalu Hans Gustafson

[email protected] [email protected] [email protected] [email protected]

Chief Economist Norway Senior Economist Economist Chief EM Economist & Strategist

+47 23 11 82 60 +46 (0)8 700 98 04 +372 888 79 25 +46 (0)8 700 91 47

Tnu Mertsina ke Gustafsson Andrejs Semjonovs

[email protected] [email protected] [email protected]

Chief Economist Estonia Senior Economist Economist

+372 888 75 89 +46 (0)8 700 91 45 +371 6744 58 44

Nerijus Maiulis Anna Breman Lija Strauna


Chief Economist Lithuania Senior Economist Senior Economist

+370 5258 22 37 +46 (0)8 700 91 42 +371 6744 58 75

Mrti Kazks Cathrine Danin Laura Galdik ien


Deputy Group Chief Economist, Chief Economist Latvia Economist Senior Economist

+371 6744 58 59 +46 (0)8 5859 34 92 +370 5258 22 75

MadeleinePulk ystein Brsum Vaiva ekut


Head of Strategy and Allocation Senior Economist Senior Economist

+46 (0)72 53 23 533 +47 99 50 03 92 +370 5258 21 56


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Swedbank Economic Outlook Update, PowerPoint

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