STOCKHOLM: Swedish government slashed on Friday its economic growth forecasts, saying it now expects business activity to expand by 0.9 percent instead of by 1.6 percent this year.
Finance Minister Anders Borg also cut the 2013 growth forecast to 1.1 percent from the 2.7 percent level that the government predicted in September, blaming a weaker outlook in Europe and uncertainty over US fiscal policy.
"It is becoming more and more clear that the crisis in Europe and the events in the United States are affecting once again employment and growth in Sweden," said Borg.
The government now expects Swedish exports to rise by only 1.4 percent next year instead of by 5.0 percent as forecast previously.
"We can expect a very poor year in 2013," added Borg. While the eurozone crisis has hit a calm patch, growth has all but evaporated.
US politicians have so far failed to agree on an alternative to avoid the huge automatic spending cuts and tax hikes that come into effect on January 1, and which would likely tip the world's top economy into recession.
But Borg said the downward revision of the government's forecasts, which bring them in line with those of the country's central bank, would not trigger a radical change in economic policy.
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