1. Growth accelerating, but difficult
Nordic Outlook post-crisis choices ahead
New focus on government debt
Economic Research – May 2010 and financial regulations
3. Economic Research
This report was published on May 4, 2010.
Cut-off date for calculations and forecasts was April 29, 2010.
Robert Bergqvist Håkan Frisén
Chief Economist Head of Economic Research
+ 46 8 506 230 16 + 46 8 763 80 67
Daniel Bergvall Mattias Bruér
Economist Economist
+46 8 763 85 94 + 46 8 763 85 06
Ann Enshagen Lavebrink Mikael Johansson
Editorial Assistant Economist
+ 46 8 763 80 77 + 46 8 763 80 93
Tomas Lindström
Economist
+ 46 8 763 80 28
Gunilla Nyström Ingela Hemming
Global Head of Personal Finance Research Global Head of Small Business Research
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Susanne Eliasson Johanna Wahlsten
Personal Finance Analyst Small Business Analyst
+ 46 8 763 65 88 + 46 8 763 80 72
SEB Economic Research, K-A3, SE-106 40 Stockholm
Contributions to this report have been made by Thomas Köbel, Klaus Schrüfer, SEB Frankfurt/M and
Olle Holmgren, Trading Strategy. Stein Bruun, SEB Oslo is responsible for the Norwegian analysis
See disclaimer on page 50.
4 | Nordic Outlook – May 2010
4. International overview
Recovery despite imbalances and crises
the
opment (OECD)
reassessed
and a
SEB
The
OECD
economies mitments
American
German
Nordic Outlook – May 2010 | 5
5. International overview
2008 2009 2010 2011
OECD
World, PPP*
6 | Nordic Outlook – May 2010
6. International overview
2000 2009 2000 2009 2000 2009
cent
tre recovery
dip scenario
GDP OECD
positive spiral in
Nordic Outlook – May 2010 | 7
8. International overview
SEB
US
8 8
5 5
2 2
Nov Jan Sep Nov Jan
Sweden United Kingdom
US
Nordic Outlook – May 2010 | 9
9. International overview
Key interest rates
5 SEB 5
tries
2 2
US Bank of England
SEB
December be
US
10 | Nordic Outlook – May 2010
10. International overview
system
Currency movements since the EUR/USD peak
Percentage change against USD since December 3, 2009
5,0%
3,0%
1,0%
-1,0%
-3,0%
-5,0%
-7,0%
-9,0%
-11,0%
-13,0%
Jan Sep Jan Sep Jan Sep Jan -15,0%
D
D
XN
W
ZD
Y
L
K
P
F
N
R
Y
B
R
K
Y
R
H
N
TR
B
JP
A
U
O
IN
U
PL
SE
EU
R
N
B
C
M
C
G
C
A
R
N
K
The Japanese yen
The
Nordic Outlook – May 2010 | 11
13. Theme: Reforming the financial infrastructure
Settlements
Financial Stability Board
(
more and
(
resilience and stability
more
proposals
TODAY FUTURE
= Real economy = Credit/banking market
14 | Nordic Outlook – May 2010
14. Theme
12.0
Credit growth
10.0
8.0
6.0
4.0
2.0
0.0
-2.0
900
Expected writedowns, USD bn
800 180 Realised writedowns, USD bn
700
600
280
500
400 100
680
300
200 400
350
70
100 100
80
20
0
US UK Eurozone Other Asia
Europe
Nordic Outlook – May 2010 | 15
15. The United States
5
2
GDP
per cent next year
6 6
5 5
4 4
3 3
2 2
1 1
0 0
-1 -1
-2 -2
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
09 10 11
Inventory contribution GDP growth
Net effect of stimulus
Source: CBO, Recovery.gov, SEB
Index
25
55
5
88
16 | Nordic Outlook – May 2010
16. The United States
Ratio
82 88
225
25
85
Nordic Outlook – May 2010 | 17
17. The United States
gov
2011
We expect US
8.9 per cent in 2011
85 85
FHFA
18 | Nordic Outlook – May 2010
18. The United States
25 25
5 5
55 85
CPI inflation
88
5 SEB 5
2 2
5 5
Core inflation Headline inflation
85
Nordic Outlook – May 2010 | 19
19. The United States
88
Federal debt
One common rule of thumb
is that government bond yields rise by about 50 basis
points if their credit rating is downgraded by one step.
Debt to GDP ratios
*
SEB
82 88
United Kingdom Canada
20 | Nordic Outlook – May 2010
20. Japan
Japan
and
Jan Sep Jan Sep Jan Sep Jan Sep Jan
that the
Nordic Outlook – May 2010 | 21
21. Asia
per cent
2011.
15.0
12.5
10.0
7.5
5.0
2.5
0.0
-2.5
Jan Sep Jan Sep Jan Sep Jan
China India
22 | Nordic Outlook – May 2010
22. The euro zone
SEB
forecast
85
Exports
Nordic Outlook – May 2010 | 23
23. The euro zone
5
After Greece, Portugal is the country that runs the great-
est risk of being hit by market instability. Large government
political experience of belt-tightening programmes, make
this small economy highly vulnerable. After that comes
Spain, whose extremely high unemployment and weak
real estate market provide fertile ground for market scepti-
cism to emerge.
Finland
10.2
Finland
Italy Slovenia
Slovakia
Spain
Ireland
trend in Germany
24 | Nordic Outlook – May 2010
24. The euro zone
,
that cent next year
2009
Budget balance, debt and current account (CA) are measured as
HICP, Core) as the
Spain
Ireland Italy
each country and the euro zone average.
Source: European Commission, IMF, SEB
Nordic Outlook – May 2010 | 25
25. The euro zone
SEB
Core inflation HICP inflation
Jan Apr Jan Apr Jan Apr
Refi rate
26 | Nordic Outlook – May 2010
26. The euro zone
Bond yields
The table shows by how many hundredths of a percentage
point (basis points) yields with different maturities (10, 5 and
2 years) and yield curves (10yr-3m, 5yr-3m, 2yr-3m) are
government debt are one percentage point higher.
Source: SEB
Nordic Outlook – May 2010 | 27
27. The United Kingdom
225 225
25 25
fall to Jan Apr Jan Apr Jan Apr
United Kingdom Italy
Nordic Outlook
28 | Nordic Outlook – May 2010
28. Easten Europe
Poland
Index
Poland
Slovakia
We are
Nordic Outlook – May 2010 | 29
29. The Baltics
A
domestic demand
ances
Exports
matically
06 07 08 09
Latvia
30 | Nordic Outlook – May 2010
30. The Baltics
Latvian government
priority
Eastern European Out-‐
look
5
85
The
are strained
Slovakia
on
Nordic Outlook – May 2010 | 31
31. Sweden
9.00
Nordic Outlook
5
32 | Nordic Outlook – May 2010
32. Sweden
2009 2009 2010 2011
Sweden
US
Nordic Outlook – May 2010 | 33
33. Sweden
28
22
85
small
2008 2009 2010 2011
98 99 00 01 02 03 04 05 06 07 08 09 10 11
Employment has turned around
4650 Number of jobs, thousands (LHS) 9.0
Unemployment, per cent (RHS)
4600 8.5
4550 8.0
4500 7.5
4450 SEB 7.0
4400 6.5
4350 6.0
4300 5.5
05 06 07 08 09 10 11
Source: Statistics S eden, S B
w E
and then
34 | Nordic Outlook – May 2010
34. Sweden
and 2.2 per cent in 2011
indicates
GDP at turning points
Index
104 104
1993Q3 = 100
103 103
2005Q1 = 100
102 102
1997Q1 = 100
101 101
100 100
2009Q1 = 100
99 99
1 year
Source: Statistics Sweden, SEB
Employment at turning points
Index
102.0 102.0
May 2005 = 100
101.5 101.5
March 1994 = 100
101.0 101.0
May 1997 = 100
100.5 100.5
Sep. 2009 = 100
100.0 100.0
99.5 99.5
1 year
Source: Statistics Sweden, SEB
Nordic Outlook – May 2010 | 35
35. Sweden
2010 2011 Employees
of Nordic Outlook that
Total lending
We are
jan maj jan maj jan maj jan maj
CPIF
36 | Nordic Outlook – May 2010
36. Sweden
SEB
Sweden
SEB
8
5
82 88
Nordic Outlook – May 2010 | 37
37. Sweden
per cent
2008 2009 2010 2011
38 | Nordic Outlook – May 2010
39. Sweden
be extra clear.
40 | Nordic Outlook – May 2010
40. Denmark
Denmark
World
Economic Outlook
overheating are
mand points.
1.8 per cent in 2011
stabilisation tendencies in
Nordic Outlook – May 2010 | 41
41. Norway
2010
demand
Strong income supports consumption
% change (4Q) % change (4Q), 2Q average
10 10
8 8
re
6 6
covery in residential investment
4 4
2 2
0 0
-2 -2
-4 -4
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Private consumption (LHS) The Norwegian
Real disposable income excl. share dividends (LHS)
42 | Nordic Outlook – May 2010
42. Norway
Unemployment shows signs of peaking
% of labour force % of labour force
8 8
7 7
6 6
5 5
4 4
Core inflation heading lower
3 3
% change (12M) % change (12M)
2 2 6.0 6.0
1 1 4.5 4.5
0 0 3.0 3.0
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
1.5 1.5
LFS unemployment rate, 3 mth. average Registered unemployed
0.0 0.0
-1.5 -1.5
-3.0 -3.0
-4.5 -4.5
95 97 99 01 03 05 07 09
CPI excl. taxes and energy
Core CPI domestic goods and services
Core CPI imported consumer goods
Wage growth and unemployment
% change (YoY) % of labour force
10.5 0
9.0 1
in 2009
7.5 2
6.0 3
4.5 4
3.0 5
1.5 6
0.0 7
87 89 91 93 95 97 99 01 03 05 07 09 11
Annual wages (LHS)
LFS unemployment rate (RHS)
Nordic Outlook – May 2010 | 43
44. Finland
cent in 2011
Index Pay
and next
Increased activity early in 2010
8
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
year
Nordic Outlook – May 2010 | 45
45. Nordic key economic data
2009 level,
DKK bn 2008 2009 2010 2011
2009 level,
46 | Nordic Outlook – May 2010
46. Nordic key economic data
2009 level,
SEK bn 2008 2009 2010 2011
FINANCIAL FORECASTS
2009 level,
EUR bn 2008 2009 2010 2011
Nordic Outlook – May 2010 | 47
47. Nordic key economic data
2009 level,
EUR bn 2008 2009 2010 2011
US
2009 level,
USD bn 2008 2009 2010 2011
2008 2009 2010 2011
GDP
Unemployment
48 | Nordic Outlook – May 2010
48. Nordic key economic data
2008 2009 2010 2011
GDP,
Bond yields
2008 2009 2010 2011
Nordic Outlook – May 2010 | 49
49. Economic Research available on Internet.
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50 | Nordic Outlook – May 2010
50. Finland
St: Petersburg
Norway
Moskva Russia
Sweden
Estonia
Latvia
New York Denmark
Beijing
Lithuania
Dublin
Shanghai
London New Delhi
Poland
Germany
Warzaw
Ukraine
Paris Luxemburg
Kiev
Singapore
Geneve
Nice
São Paulo
SEB is a North European financial group serving some , corporate customers and
institutions and five million private individuals. SEB offers universal banking services in
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presence in the other Nordic countries, Ukraine and Russia and a global presence through
its international network in major financial centres. On March , , the Group’s
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