Svantesson: Government policies deserve credit for economic upturn

Swedish Finance Minister Elisabeth Svantesson attributes the government's policies to a brighter economic forecast, as presented by the National Institute of Economic Research (KI). KI has revised its growth projections upward, anticipating the end of the recession in 2027, with expectations of increased GDP growth and a gradual decrease in unemployment.

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The government has made it cheaper to refuel and buy food. These are, according to Elisabeth Svantesson, a couple of reasons behind the forecast of a receding recession, increased GDP growth, and gradually falling unemployment that the National Institute of Economic Research presented on Tuesday.

Svantesson expressed confidence in the government's economic strategy, citing measures like reduced fuel and food taxes as contributing factors to the improved outlook. She stated that the government's previous cautious approach, aimed at curbing high inflation, is now yielding positive results. "We are now reaping the benefits of that," Svantesson remarked, referencing the period when the government prioritized controlling inflation over expansive economic measures.

However, economists have cautioned that the current strengthening of household purchasing power and low inflation figures may be partly artificial, bolstered by government tax relief and subsidies. KI's forecast also indicates that inflation is expected to rise above the 2 percent target next year, driven by anticipated increases in energy prices and the phasing out of tax subsidies. Despite these warnings, Svantesson remains unconcerned, asserting that inflation remaining around the target level is the Riksbank's objective and not a cause for alarm.

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The recession that KI predicts will ebb out next year has been due to people's caution in consumption and lack of faith in the future.

Addressing criticism regarding the rise in unemployment during the current government's term, Svantesson argued that increased demand in the Swedish economy will lead to more job creation. She believes that reforms to benefits and tax cuts will encourage more people to enter the labor market. The opposition has frequently used the increase of 100,000 unemployed individuals as a key point of debate against the government's economic policies.

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When demand increases in the Swedish economy, more people will be employed. Through both benefit reform and lower taxes, we ensure that more people enter the labor market.