Erik Thedéen: Sweden is well placed to deal with the international turbulence
Presentation “What is now happening in the world around us risks having significant consequences for economic development, both globally and here in Sweden. It is still too early to assess exactly how this will play out. But it is clear that the range of outcomes for what might happen in the future has become much broader, both in terms of economic activity and inflation. Irrespectively, in Sweden we are in a good position to handle these developments.” These were the words of Governor Erik Thedéen when he spoke on Tuesday about the economic situation at the Riksdag Committee on Finance and at a network meeting for financial managers in Stockholm.
Date: 08/04/2025 11:30
Speaker: Governor Erik Thedéen
Place: Skandiasalen
Erik Thedéen, governor.
Financial markets have reacted very strongly to the US administration's announcement of increased import tariffs, with stock markets plummeting, interest rates falling and risk premiums rising. “Trade barriers are not good for economic developments, nor for inflation, and those who impose tariffs typically suffer the most themselves. But the uncertainty affects everyone.”
“Sweden has a relatively good starting position and Swedish companies have previously shown great flexibility to adapt to external pressures. At the same time, the uncertainty surrounding tariffs may hamper consumption and investment. It will be important to follow developments closely going forward."
After rising at the beginning of the year, inflation fell as expected in March. “This was a welcome development. But inflation is still slightly elevated and we need to wait for the final inflation outcome to make a proper analysis. As we communicated at the time of the most recent interest rate decision, there is much to suggest that the higher inflation this year is temporary. At the same time, we recognise that what is happening in the world now may affect inflation going forward. Increased trade barriers tend to lead to higher inflation, at least in the short term; on the other hand, a weaker economy can have a dampening effect on inflation.”
“The possible range of outcomes has become significantly larger,” concluded Mr Thedéen. “We are following developments closely and have both the readiness and the scope to act if developments require it.”