Finance Minister: "Brighter times ahead"

1:48 min

The government lowers its growth forecast to 3.5 per cent for this year, but Minister for Finance Magdalena Andersson expects a somewhat stronger growth in the coming two years.

Speaking to the press as the government's budget talks were set to start at Harpsund, Andersson said that Sweden's economy is strong, with significantly more people in employment than previously and strengthened state finances.

"We're doing really well compared to other countries with regards to growth," Andersson said.

On the labour market, Andersson spoke of "very positive" results and forecasts. The employment level will decline somewhat with newly-arrived immigrants entering the labour market, but according to the government's forecast, employment will be back at today's level by 2020.

On the other hand, there is a labour shortage in certain areas, while unemployment is high amongst those lacking further education. This labour shortage is a sign of lacking efforts during the financial crisis, and must be tackled through improving matching opportunities for the unemployed, according to Andersson.

The forecast for the number of asylum seekers has been sharply reduced due to the government's new migration policy. As a consequence, there has been a significant cost reduction for migration and integration.

With regards to risks in the rest of world that could have an impact on Sweden's economy, the finance minister pointed to four main problems areas: Brexit spreading effects, a hard landing in China, instability in the European banking sector, and a potential imbalance of asset prices.

But things are looking up for the future, according to the finance minister, who mentioned that a rise in housing investments had been a positive surprise.

"We are heading for brighter times ahead, with stronger growth in the world around us," she said.

The government has gathered at the Prime Minister's recreational country residence, Harpsund, to start off the negotiations over the budget for next year, which is due for presentation on 20 September.

This budget is seen as important as it is will be implemented during the last full year ahead of the elections in 2018.