Expansionary monetary policy to underpin Swedish economy in 2016

Sweden’s economy was not able to sustain the high growth rates that were seen last year. Even if domestic demand continues to be robust and is expected to remain a vital driver of growth in the quarters ahead, worries regarding subdued growth in the emerging markets have exerted pressure on growth at the start of 2016. The Brexit vote is expected to hurt the economic momentum in the third quarter, said Commerzbank in a research report.

However, Sweden’s economy is expected to be underpinned by the continued expansionary monetary policy. This might help Sweden register decent economic growth again in 2016. In recent times, there has been mixed news on the inflation front, which is still a cause of concern. It might appear that the pace of inflation has been accelerating recently. Even if inflation was close to zero percent at the end of last year, it has accelerated recently.

The underlying pace has also been accelerating since the start of early 2016. But it is quite soon to say it is all clear on the inflation front as the trend in inflation has been upbeat in the past months but continues to remain weak and is pretty volatile, added Commerzbank.