By Charles Duxbury
STOCKHOLM--Sweden's finance minister came under renewed pressure
Friday to lower his upbeat growth forecasts for the Swedish
economy, as the outlook for exports darkens due to the economic
slowdown in the euro zone.
Magdalena Andersson, the economic spokeswoman for Sweden's
largest opposition party, the Social Democrats, urged Finance
Minister Anders Borg to submit an updated and "realistic" view of
the Swedish economy to lawmakers for review.
Mr. Borg should then update his policy proposals for 2013 to
take into account the worsening outlook, Ms. Andersson wrote in an
opinion piece in Swedish daily Dagens Nyheter.
The finance ministry's forecasts are important because they form
the basis of Sweden's budget for 2013. In a September proposal for
that budget, Mr. Borg promised 23 billion kronor ($3.4 billion) in
extra spending, which was more than had been expected.
These plans for extra spending may have to be trimmed now with
output growth in Sweden now seemingly grinding to a halt.
Industrial production fell by over 4% on the month in
September.
Half of Sweden's gross domestic product comes from exports and
with about 35% of those exports going to the troubled euro zone
Sweden is sensitive to the slowdown there. Figures published
Thursday showed the common currency bloc fell into a recession in
the third quarter. The euro zone hasn't grown for four straight
quarters and the latest decline in GDP was the second straight
drop.
When presenting his September budget proposals, Mr. Borg said he
thought the Swedish economy would grow 1.6% this year and 2.7% next
year.
That is more upbeat than Sweden's central bank which now
forecasts output will grow just 0.9% this year and 1.8% in
2013.
"Even when the budget was presented the government was
criticised hard for its over-optimistic view of the Swedish
economy," Ms. Andersson wrote. "Now parliament is set to make a
decision on a budget when the premises for it lack relevance. This
is not responsible," she wrote.
Since September a number of large Swedish companies, including
telecom-equipment maker Ericsson (ERIC), have announced job cuts in
Sweden in a bid to ride out the global economic slowdown.
Unemployment in Sweden is on an upward trend and could top 8% in
the months ahead, according to analysts.
SEB bank economist Robert Bergqvist said the finance minister
should at least halve his forecasts for economic growth for this
year and next even though it would likely be a knock to the
government's credibility to do so.
Mr. Bergqvist said the finance minister will lower his forecasts
by next Tuesday at the latest. Mr. Borg is due to speak at an event
in Stockholm about the outlook for the economy Tuesday.
Mr. Borg said recently that even when he presented the budget
proposals he signaled that the forecasts were subject to "downside
risks". He acknowledged that Sweden is now experiencing a "very
sharp slowdown."
The reason why he hasn't rushed to revise down his forecasts
since September is because the slowdown had been of a type which
wouldn't have a serious effect on his budget planning in the short
term, he said.
"What has happened so far has been mainly centered on things
like poor export numbers, which don't hit public finances so hard,"
he said.
The finance minister said last Friday he would wait until next
year before issuing any new economic forecasts.
-Write to Charles Duxbury at charles.duxbury@dowjones.com