Nordic Outlook: On the cusp of a global recessi...

The ongoing credit crisis will continue to dominate the global
economy, as tighter credit conditions and falling home prices hamper
growth. Next year, growth in the OECD will be the lowest since the
early 1990s. Looking ahead, emerging economies will also be affected
to a greater degree by secondary effects from the slowdown in
industrialised countries. Overall, the world economy will grow by 3
per cent in 2009, which is close to a recession at the global level.
Inflation will gradually turn downward, and combined with ever weaker
economic conditions this will open the door for interest rate cuts in
Europe on a broad front in 2009.

The Swedish economy is now rapidly weakening. This year GDP growth
will be 1.4 per cent and next year 0.9 per cent. Job growth will
decelerate and unemployment will climb to 7.3 per cent in 2010. The
labour market slowdown, combined with declining inflation next year,
will enable the Riksbank to begin cutting its key interest rate in
February 2009. By the end of next year, the repo rate will stand at
3.50 per cent. Sustained by strong finances, the government will
implement fiscal stimulus measures of around SEK 40 billion in both
2009 and 2010. By 2010, public finances will have swung into a
deficit of nearly 1¿ per cent of GDP.


The American economy will decelerate once again as the positive
impact of the federal stimulus package and foreign trade fades.
Households are squeezed by tighter lending practices, further home
price declines and continued labour market weakening. Lower energy
prices will provide some relief, but the Federal Reserve's earlier
interest rate cuts are only partly reaching consumers. GDP growth
will be 1.6 per cent this year and 0.6 per cent in 2009. The Fed's
key rate will remain at 2.0 per cent for another year.

Economic conditions in Western Europe are now in a steep decline.
Euro zone growth will end up below 1 per cent next year. In the
United Kingdom, the slump will be even deeper. High inflation will
delay interest rate cuts by the European Central Bank until March
2009. By the end of next year, the ECB's refi rate will be 3.25 per
cent. Significant regional differences in the euro zone are a
complicating circumstance for monetary policymakers. Weak public
finances and the restrictions imposed by the Stability Pact are also
constraining fiscal stimulus measures in many countries.

The US dollar will continue to recover against the euro as economic
weakening in Western Europe becomes ever clearer. Interest rate cuts
in Europe next year will mean smaller short-term interest rate
spreads, providing further support for the dollar. Falling commodity
prices will have the same effect. By the end of 2009, the EUR/USD
rate will drop to 1.37. Bond yields will fall further, in the wake of
weak growth and lower key interest rates.

The Swedish economy is weakening on a broad front as the
international slowdown deepens. Growth will end up well below trend
both this year and next; 2008-2010 will thus be Sweden's weakest
three-year period since the 1990s economic crisis. The labour market
slowdown is becoming ever more apparent, and next year there will be
a clear upturn in unemployment. Inflation will soon peak but remain
high in the coming year. Lower energy prices and progressively more
subdued labour cost pressures will cause inflation to turn downward
during 2009. Because of an increasingly listless economy and a
gradual decrease in the inflation threat, the Riksbank will begin
cutting its key interest rate in February next year, to 3.50 per cent
by the end of 2009 and to 3.0 per cent a few months into 2010. The
krona will mainly keep pace with the euro but will weaken against the
dollar and thus also in trade-weighted terms.

Strong central government finances will open the way for sizeable
fiscal stimulus measures during the next couple of years. We expect
stimulus packages of around SEK 40 billion in both the 2009 budget
and the budget for 2010, an election year. Due to the combined effect
of these measures and weak economic performance, public finances will
rapidly weaken and will reach a deficit equivalent to 1.3 per cent of
GDP in 2010. The overall deterioration in public sector finances in
2007-2010 will thus total about 5 per cent of GDP.

Key figures, Swedish economy
Year-on-year percentage change


+----------------------------------------------------------------+
|                                    | 2007 | 2008 | 2009 | 2010 |
|------------------------------------+------+------+------+------|
| GDP, adjusted for work days        | 2.9  | 1.4  | 0.9  | 1.8  |
|------------------------------------+------+------+------+------|
| Unemployment (%) (ILO definition)  | 6.2  | 6.2  | 7.0  | 7.3  |
|------------------------------------+------+------+------+------|
| CPI inflation                      | 2.2  | 3.9  | 3.2  | 1.7  |
|------------------------------------+------+------+------+------|
| Public financial saving (% of GDP) | 3.5  | 2.9  | 0.4  | -1.3 |
|------------------------------------+------+------+------+------|
| Repo rate (December)               | 4.00 | 4.75 | 3.50 | 3.00 |
|------------------------------------+------+------+------+------|
| Exchange rate, EUR/SEK (December)  | 9.43 | 9.45 | 9.45 | 9.30 |
+----------------------------------------------------------------+


SEB is a North European financial group serving some 400,000
corporate customers and institutions and five million private
individuals. SEB offers universal banking services in Sweden, Germany
and the Baltic countries - Estonia, Latvia and Lithuania. It also has
local presence in the other Nordic countries, Poland, Ukraine and
Russia and a global presence through its international network in
another ten countries. On 30 June 2008, the Group's total assets
amounted to SEK 2,304bn (EUR 244 bn) while its assets under
management totalled SEK 1,295bn (EUR 137 bn). The Group has about
22,000 employees. Read more about SEB at www.sebgroup.com.
_____________________________________________
For further information, please contact:
Robert Bergqvist, telephone [phone]
Håkan Frisén, [phone]
Mattias Bruer, [phone]
Bo Enegren, [phone]
Mikael Johansson, [phone]
Tomas Lindström, [phone]
Press contact: Elisabeth Lennhede, [phone],
[e-mail]