Nordic Outlook: Recovery while awaiting exit po...

Governments and central banks seem to be drawing a sigh of relief.
The world is now catching its breath before the second lap of a tough
long-distance race. Exceptional stimulus measures have served as a
successful counterweight to a powerful recession and credit crunch.
We expect GDP growth in the 30 OECD countries to be close to their
trend levels in 2010-2011. China is "guaranteeing" the world that its
economy will grow at the 8-9 per cent target rate but needs continued
stimulus. Unemployment in most countries will peak in 6-9 months,
earlier and at a lower level than in our September forecast. The risk
of "printing press inflation" is being exaggerated. The United States
and the euro zone will raise their key interest rates cautiously in
the autumn of 2010 from extremely low levels, once the risk picture
has become more symmetrical. But this does not mean the world is back
to business as usual. Economic growth will not suffice to generate
new jobs at the desired pace, despite the impact of burgeoning
government debt and grotesquely large central bank balance sheets,
which need to be reduced.


Sweden is well-positioned both in the short and long term - strong
fundamentals pay off. GDP growth will end up at 2.5 per cent in 2010
and at 2.8 per cent in 2011 (in calendar-adjusted terms), somewhat
above trend, thanks to the government's stimulus measures and an
economy that has been influenced to an especially high degree by
ultra-expansive monetary policy. Unemployment will level off at
around 10 per cent next summer. We expect collective pay agreements
of close to 2 per cent next year, which hardly poses any inflationary
threat - productivity will rebound. The Riksbank's interest rate
policy will be influenced by future banking regulations and by
additional fiscal stimulus, which we expect regardless of the
political colour of the government that takes office after the
September 2010 election. The first repo rate hike will come in the
spring, and we expect the key rate to be 2 per cent at the end of
2010 and 3 per cent at the end of 2011. The low interest rate
environment will thus persist.

"The effectiveness of expansive economic policies will be sufficient
to provide positive global growth surprises in 2010," says HÃ¥kan
Frisén, SEB's Head of Economic Research and editor in chief of Nordic
Outlook. "Granted that stock market curves, confidence indicators and
inventory effects can be deceptive, but as long as stimulus policies
remain in place, the recovery is likely to continue, fuelled by
continued optimism in financial markets."

"But the recovery may still derail," says Robert Bergqvist, SEB's
Chief Economist. "We still do not know how self-sustaining economic
growth will be, beyond inventory effects and targeted government
support. In 2011, growth risks will be on the downside. There is
great uncertainty about the shape and impact of exit policies. The
need to shrink super-sized government and private sector debts around
the world will also hobble economic performance. There is also
uncertainty about how changes in financial sector regulations will
affect lending by banks," Mr Bergqvist says.

The unconventional policies of central banks are creating worries
about monetary inflation, especially in an environment of growth
curves that are cautiously pointing upward again and of inflation
pressure from commodities.

"Underlying inflation will continue downward in Europe and the US,
driven by low resource utilisation, decelerating pay increases and
rebounding productivity," says Tomas Lindström, monetary policy
analyst at SEB Economic Research. "The money supply circulating in
the real economy has not risen in the past year despite monetary
expansion. And above-trend growth will be needed in order to boost
inflation pressure. Inflation is low while asset prices are moving
upward, which may soon pose a dilemma for central banks. This will
increase the pressure on central banks to focus more attention on the
risk of new financial imbalances. But key interest rates will
probably not need to be raised especially much in order to have a
restraining effect. Earlier estimates of neutral interest rates are
probably too high," Mr Lindström says.

The US economy is under heavy strains, but large-scale stimulus
policies are in place.

"We are admittedly seeing a cyclical bottom and greater stability in
the real economy and financial markets, but there are still major
problems," says Mattias Bruér, US analyst at SEB Economic Research.
"Stimulus measures are contributing greatly to decent growth, but
this effect will fade. Unemployment will peak at 11 per cent, and
there is heavy downward pressure on wages and salaries. Meanwhile
small banks are not yet on firm ground, which is hampering credit
growth. The Federal Reserve is in no rush to raise its key interest
rate - it will take the first step late next year," Mr Bruér says.

Sweden may soon show a growth rate that is rather high in an
international perspective.

"Strong fundamentals pay off, especially in the Nordic countries.
Many countries must formulate exit strategies in the near future and
tighten their belts to stop excessively rapid deterioration in
government finances. Here Sweden has a relatively good starting
position," says Daniel Bergvall, government finance analyst at SEB
Economic Research. "Unemployment will climb by 3.5 percentage points,
which will of course have repercussions on central government
finances. But budget deficits will end up at 2.5 per cent of GDP both
in 2010 and 2011, which is a low level in international terms, and
central government debt will increase to 'only' 40 per cent of GDP. A
change of government will not alter this forecast to any great
extent," Mr Bergvall says.

Consumer Price Index (CPI) inflation in Sweden will increase somewhat
over the next six months, but underlying price pressure will be
pushed downward by such factors as historically low resource
utilisation, higher productivity, a stronger Swedish krona and an
increased likelihood of falling food prices.

"Although we are a little more optimistic about economic growth and
the labour market, we are not especially worried about inflation in
Sweden. Underlying inflation is admittedly a little higher in Sweden
than elsewhere, but this follows historical patterns rather well. We
expect a correction as productivity and the krona exchange rate reach
more normal levels," says Håkan Frisén. "The Riksbank is actually in
no hurry to raise its key interest rate, but our assessment is that
it will begin its rate hikes in the spring of 2010, that is, a little
earlier than the bank has so far indicated. A brighter economic
picture, including a more symmetrical risk scenario and increasingly
clear tendencies towards imbalances in the housing market, are
reasons for beginning the process a bit earlier than most other
central banks," Mr Frisén says.

Group of 20 economists are now in the process of building the "new
world economic order" aimed at achieving more balance, stable global
economic and financial market performance in the future.

"It is important to monitor the work of the G20, especially
considering Sweden's great dependence on international developments,"
says Robert Bergqvist. "We are moving towards a globalisation of
economic policymaking and financial infrastructure. Political
influences on the real economy and the financial system will increase
in the future. There is a time line for how the G20 countries should
work together in the coming years. This is a very positive
development, but large portions of the design for the new economic
order are still missing - of course this creates uncertainty about
the future rules of the game for households and companies," Bergqvist
concludes.

Key figures: International and Swedish economy

+-------------------------------------------------------------------+
| International economy. GDP,         | 2008  | 2009  | 2010 | 2011 |
| year-on-year change, %              |       |       |      |      |
|-------------------------------------+-------+-------+------+------|
| United States                       |  0.4  | -2.5  | 3.0  | 2.2  |
|-------------------------------------+-------+-------+------+------|
| Euro zone                           |  0.6  | -3.9  | 1.8  | 2.1  |
|-------------------------------------+-------+-------+------+------|
| Japan                               | -0.7  | -5.0  | 1.8  | 2.1  |
|-------------------------------------+-------+-------+------+------|
| OECD countries                      |  0.6  | -3.5  | 2.3  | 2.4  |
|-------------------------------------+-------+-------+------+------|
| China                               |  9.0  |  8.5  | 9.0  | 9.0  |
|-------------------------------------+-------+-------+------+------|
| Baltic countries                    | -1.0  | -15.8 | -2.6 | 3.6  |
|-------------------------------------+-------+-------+------+------|
| The world                           |  3.1  | -1.0  | 3.9  | 4.1  |
|-------------------------------------+-------+-------+------+------|
| Swedish economy. Year-on-year       | 2008  | 2009  | 2010 | 2011 |
| changes, %                          |       |       |      |      |
|-------------------------------------+-------+-------+------+------|
| GDP, working day adjusted           | -0.5  | -4.2  | 2.5  | 2.8  |
|-------------------------------------+-------+-------+------+------|
| GDP, actual                         | -0.2  | -4.3  | 2.8  | 2.8  |
|-------------------------------------+-------+-------+------+------|
| Unemployment, % (EU definition)     |  6.2  |  8.3  | 9.8  | 9.9  |
|-------------------------------------+-------+-------+------+------|
| Consumer Price Index (CPI)          |  3.4  | -0.3  | 1.2  | 2.4  |
| inflation                           |       |       |      |      |
|-------------------------------------+-------+-------+------+------|
| Government net lending (% of GDP)   |  2.5  | -1.9  | -2.5 | -2.3 |
|-------------------------------------+-------+-------+------+------|
| Repo rate (December)                | 2.00  | 0.25  | 2.00 | 3.00 |
|-------------------------------------+-------+-------+------+------|
| Exchange rate, EUR/SEK (December)   | 10.92 | 10.20 | 9.70 | 9.30 |
+-------------------------------------------------------------------+


SEB is a Northern 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 three Baltic countries - Estonia, Latvia and Lithuania. It
also has a local presence in the other Nordic countries, Ukraine and
Russia and a global presence through its international network in
leading financial centres. On September 30, 2009, the Group's total
assets amounted to SEK 2,233 billion and its assets under management
totalled SEK 1,295 billion. The SEB Group has about 20,000 employees.
Read more about SEB at www.sebgroup.com.

_____________________________________________
For further information, please contact:
Robert Bergqvist, [phone]
Daniel Bergvall, [phone]
Mattias Bruér, [phone]
Håkan Frisén, [phone]
Olle Holmgren [phone]
Mikael Johansson, [phone]
Tomas Lindström, [phone]
Elisabeth Lennhede, Press & PR, [phone],
[e-mail]


This announcement was originally distributed by Hugin. The issuer is 
solely responsible for the content of this announcement.