The National Institute of Economic Research on Thursday downgraded the growth outlook of Sweden as exports are growing more slowly than normal.
The economy is forecast to expand 2 percent in 2015, which was revised down from 2.9 percent estimated in August. The growth is forecast to rise to 2.8 percent in 2016 and 2.9 percent in 2017.
In August, the institute projected 3.1 percent expansion for both 2016 and 2017. The outlook for 2014 was retained at 1.9 percent.
Should the situation deteriorate, greater responsibility for stabilization will fall on fiscal policy, as monetary policy has limited scope to provide further support, the think tank said.
Nonetheless, the NIER does not believe sharp fiscal tightening to be a likely or appropriate stabilization policy in the current situation.
The jobless rate is forecast to fall to 7.7 percent in 2015 and to 7.4 percent in 2016. In August, it had estimated 7.6 percent for 2015 and 7.3 percent for 2016. The estimate for this year was left unrevised at 7.9 percent.
The Riksbank is expected to hike its key rate to 0.25 percent from the current zero percent only in 2016 and then to 0.75 percent in 2017.
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