News labeled economy:

Clear signals of a US recovery combined with a deepening euro zone debt crisis have figured prominently in recent economic developments. SEB’s economists have presented updated forecasts for various regions in the past week. They have adjusted GDP growth in the United States upward to 2.3 per cent in 2012, while they now expect the euro zone economy to shrink by 0.6 per cent. Strong fourth quarter 2011 GDP figures have led to an upward revision of this year’s Chinese growth. Taken together, this means that SEB now anticipates marginally higher global growth compared to the November forecast in Nordic Outlook.

Net exports have stopped being the growth driver for the Danish economy. Instead, after retrenchment in 2011, fiscal policy will take over as growth driver in 2012 due to public investments and one-off transfers from a pension reform. However, the stimulus looks to be smaller than originally estimated. SEB’s economists therefore revise down their growth projection for the Danish economy in 2012 to 0.5 per cent but leave it at 1.4 per cent for 2013.

The broad contours of SEB’s economists’ expectations for the Norwegian economy remain intact. Growth in overall GDP should accelerate to 2.1 per cent in 2012 helped by a very strong investment cycle in the oil sector. However, relative to their outlook in November last year, they have sliced their forecast for growth in mainland GDP – excluding oil/gas and shipping – to 2.4 per cent in 2012, marginally slower than in 2011, but leave the 2013 forecast at 2.9 per cent.

SEB’s economists in a note says that while the ongoing crisis in the euro zone and worsening economic outlook for many of the UK’s important trading partners are downside risks, leading indicators such as the PMIs have been encouraging, suggesting that GDP growth will turn positive again in the current quarter. The UK may thus escape a technical recession. All in all, SEB’s GDP forecasts have been lowered to 0.4 per cent for 2012 and 1.7 per cent in 2013.

SEB’s economists have raised their forecast for China’s GDP growth to 8.5 per cent in 2012 and 8.7 per cent in 2013 following growth of 8.9 per cent in the fourth quarter of 2011. The economists say that as long as the euro zone debt and banking crisis does not spread globally there’s a chance growth could exceed the forecast.

The ongoing crisis in the euro zone and a weak economic outlook for many important export partners is taking its toll on the export dependent Finnish economy. Leading indicators have been continued to fall in late 2011 after a temporary upturn in September-October. SEB’s economists have revised downwards their 2012 and 2013 economic growth forecast for the Finnish economy to 0.5 per cent and 1.7 per cent respectively.

SEB’s economists have revised their forecast for Sweden’s 2012 growth downwards to 0.5 per cent from 0.7 per cent, mainly due to further deterioration of the growth outlook for the euro zone. Incoming data also confirm the assessment that GDP declined in the fourth quarter and the economists have lowered their forecast to a 0.8 per cent fall compared to the third quarter.

The Japanese economy is still recovering and SEB’s economists remain relatively optimistic on the near-term growth prospects, helped by further reconstruction work.

Still, yen appreciation is hurting the export sector and consequently the economists have sliced a few tenths off of the 2012 GDP forecast. Real GDP will grow 1.7 per cent and 1.2 per cent in 2012 and 2013, respectively according to an updated forecast.

There have been some encouraging economic data lately but the euro zone is still unlikely to avoid a recession, SEB’s economists say in a research note. Weakening growth prospects, delayed reforms and political challenges imply that a Greek exit from the euro zone is a distinct possibility. However, a break up of the whole euro zone is still unlikely but success depends on continuing support from the ECB combined with national adjustment programmes and further steps toward a fiscal union.

SEB’s economists in a forecast update estimate that U.S. real GDP grew at a 3.5 per cent annualised rate in the fourth quarter; a tad higher than the bank’s forecast in the latest Nordic Outlook. The economy clearly has momentum and the fiscal headwind is actually less severe than previously forecasted, at least in the very short term. But while the U.S. economy gives off the allure of a country that has decoupled, the economists are concerned about the tightening in financial conditions as well as the lagged effects from the recession in Europe.

SEB’s Housing Price Indicator rose to -17, but remains stuck in a fairly small range with most households expecting prices to decrease or stay unchanged. In January’s survey, 69 per cent of respondents believe house prices will decrease or stay unchanged over the coming year. More specifically, 43 per cent of the households expect prices to fall while 26 per cent believe house prices will stay unchanged. The share expecting prices to rise was unchanged at 26 per cent for the third month in a row.

As the Chinese standard of living improves, social unrest is both increasing and changing character. China is currently approaching a level of affluence which research has shown increases the likelihood of democratisation. Indeed, protests appear to be refocusing from economic to political issues, writes SEB economist Andreas Johnson in a research note.

However, what is at stake is not an overthrow of government but rather reform of the country's political system.

SEB’s latest Baltic Housing Affordability Index shows that the average Estonian can buy 49 square meters of housing in the capital Tallinn, whereas the corresponding figure for Latvia and Lithuania are 43 and 35 square meters respectively.

SEB’s experts see commodities markets off to a shaky start 2012, but the situation should gradually improve over the course of the year assuming no major negative event such as a hard landing in China or a euro zone break-up. In the latest issue of Commodities Monthly, SEB’s experts says there’s little further downside risks for energy and metals prices due to marginal costs and supply optimization efforts in producer countries.

Corporate bonds issued by solid companies are emerging as the safer choice for investors in today’s turbulent market. “In some cases it is better to own corporate bonds issued by companies with stable sales than government bonds issued by countries with weak tax bases and rising expenditures,” SEB’s analysts state in the December Investment Outlook. Hans Peterson, global head of Investment Strategy within SEB’s Private Banking business, discusses investment options in this short video (4:25).

The Swedish government is to propose higher capital adequacy requirements for systemically important banks in an effort to strengthen the stability of the Swedish banking system and reduce the vulnerability of the Swedish economy. SEB meets these reqirements today.

Crude oil is back on the radar with prices forecast to rise more than previously expected, but in general commodities will be flat over the next six months in light of the current global turbulence.

SEB’s economists led by Håkan Frisén, head of Economic Research, have cut their 2012 GDP growth forecast for Sweden 0.4 percentage points to 1.0 per cent as expectations for eurozone growth have come down. Furthermore, household consumption is showing signs of being less resilient to the downturn than previously expected.

In general, Swedish data over the last two months has been mixed. On the one hand sentiment indicators have to some extent been disappointing, on the other hand hard data have held up well.

In the near term SEB’s experts forecast third quarter 2011 growth of 0.4 per cent from the second quarter and 3.4 per cent from the year-ago quarter.

SEB’s economists have cut their GDP growth forecasts for the eurozone since, with a few exceptions, indicators have been weaker than expected over the past six weeks. The economists do not yet see solution to the financial crisis in sight, which implies substantial risk of a recession. A statement by Angela Merkel Nicolas Sarkozy last week about bank recapitalisation and solving the Greek crisis is mildly encouraging.

Impressions from the past weekend’s meetings in Washington, DC, are scary on several levels. Finance ministers and central bank governors expressed unprecedented and unanimous pessimism. Decisions during the next six weeks until the November 3-4 meeting of the Group of 20 will be of major importance in determining how economic crises and growth in the world will unfold. SEB’s chief economist Robert Bergqvist gives his view on the situation in a note released Wednesday.

In the latest issue of Commodities Monthly, SEB’s experts say that gold is likely to shine yet brighter as the eurozone debt situation continues to intensify and debt laden OECD governments are forced to launch monetary rather than fiscal stimulus in order to counter flagging growth. However, broad based commodity indices are going to struggle as leading indicators point to further weakening in global growth while individual commodity performance is going to be more divergent with commodities in tight supply fairing the best while others will remain in harms way.

The negative interaction between the financial and real economy has changed the playing field. Despite a less favourable economic outlook the government fiscal policy will be less expansionary. Major reforms in the budget bill for 2012 are more money to infrastructure, poor pensioners, education, labour market policy and last but not least lowered VAT on restaurants. Read SEB economist Daniel Bergvall's comments here.

An early parliamentary election will be held in Latvia on 17 September SEB expects a change of government to a broad coalition which will involve the ruling centre-right and Western-oriented party, Unity. "We foresee no fundamental change in policy, with budget consolidation and euro zone membership in 2014 still a priority," Mikael Johansson, head of Eastern European research at SEB, says.

Given the uncertain outlook for the world’s two most liquid currencies, the dollar and the euro, investors are likely to continue to diversify away from them towards fundamentally stronger peers. In the latest issue of Currency Strategy, SEB’s experts remain optimistic concerning currencies with strong internal and external fundamentals, which should attract further capital inflows.

Today's turbulent economic times dictate a cautious approach to investment and spreading portfolios over a range of asset classes, advices Hans Peterson and team from Investment Strategy in the latest Investment Outlook released Tuesday. Watch Peterson talk more about investment strategies going forward or click link below to read full report.

The net difference between those expecting house prices in Sweden to rise and those expecting them to fall over the coming year declined to -24 in September from -2 last month. The drop is similar in size to the large drop seen in October 2008, immediately after the Lehman crash.

Thursday’s eurozone agreement is a step in the right direction. However, we’re moving through a 3-stage process: solving liquidity problems, solving solvency problems, and re-building economies to create long-term economic growth/stability. We are still in the first stage. Moreover, challenges will remain due to uncertainty about the situation in Portugal, Ireland and Spain, more question marks about global growth momentum and the political and democratic implications of latest and upcoming necessary political decisions.

Trade publication Euromoney at its annual Awards for Excellence ceremony Thursday evening named SEB Best Bank, Best M&A House and Best Cash Management House in the Nordic & Baltic Region. This is the first time SEB can claim the award for best regional bank. In addition to the regional awards, Euromoney also named SEB Best Bank in Latvia.

SEB has adjusted the full year 2011 and 2012 forecasts for the Lithuanian economy upward due to unexpectedly positive business and consumer sentiment and an upturn in domestic demand. However, as in the other Baltic countries volumes in private consumption and investments are still low. SEB’s experts now believe the Lithuanian economy will grow 6.5 per cent in 2011 and 5.0 per cent in 2012.

The European Commission will present a proposal for a Tobin tax on financial transactions this autumn. Implementation of this tax is unlikely as both Sweden and the UK oppose it. It would be easier to find support for a stability levy, writes SEB economist Andreas Johnson in a note published Wednesday.

Financial Hearings Tuesday named Robert Bergqvist, SEB’s chief economist, best economic commentator in Sweden. SEB Enskilda number also retained its number one position in Swedish equity research for the 10th year running, putting the bank ahead of rivals Handelsbanken and Carnegie.

The net difference between those expecting house prices in Sweden to rise and those expecting them to fall over the coming year declined to +29 in June from +36 last month, the lowest level since March this year. While households have become less optimistic on house prices the indicator remains stable within the range that has prevailed since summer 2009 and remains at levels signalling rising prices.

For a few weeks in April, and for the first time this year, stocks and bonds in emerging markets (EM) together attracted more cash investment than their developed market counterparts. Was that a turning point following their lacklustre performance in the first quarter? SEB’s experts says they see obvious potential risk concerning the performance of EM assets over the next three to six months, mainly including liquidity connected with terminating quantitative easing in the US, political volatility in the Middle East and North Africa spreading to major oil exporting countries and disorderly Greek debt reconstruction.

The global recovery will continue, helped by the underlying power of the emerging market economies, low interest rates in the Western world and optimistic, profitable companies, SEB’s economists say in the latest issue of Nordic Outlook released Tuesday.

Cautious economic policy tightening in emerging market economies will lay the groundwork for a soft landing, while in the OECD countries the recovery has become sufficiently self-sustaining to withstand the challenges created by the disaster in Japan, unrest in the Middle East/North Africa and high prices for energy and other commodities.

Lithuania's economy grew by 6.9 per cent in the first quarter of 2011 compared to the same quarter a year ago, statistics released Thursday shows. The growth figured was inline with SEB’s forecast but exceeded the market’s expectations, which stood at 4.9 per cent. Mikael Johansson, head of Eastern European economic research at SEB, says it’s important to underline however is that there are still sizeable base effects behind the economic recovery. In sectors like retail trade and construction comparative figures were strongly depressed one year ago.

SEB’s Housing Price Index for Lativa declined in March after gradually increasing over the past six months. The number of respondents in a survey commissioned by SEB who say that they believe that housing prices will rise has decreased by six percentage points and now only 33 per cent expect housing prices to rise.

SEB’s experts believe effects on financial markets and the economy from the earthquake and tsunami in Japan will be short lived while nuclear problems pose a big risk.

The economists have assembled a chart package on possible economic effects from the earth quake. Among others they have included charts on growth and financial markets after Kobe quake, hurricane Katrina 2005 and the 9-11 terror attacks 2001. There are also some charts on the Japanese energy sector, implications for oil prices and Japanese holdings of US bonds.

Their main scenario remains that the impact on growth will be limited and that central banks will hike according to plans. They also discuss a risk scenario for growth and central banks if the nuclear damage should deteriorate.

Northern European subsidiaries operating in China have a more bullish outlook on the economy than those from other regions, according to SEB's latest China Financial Index, with 80 per cent of those surveyed indicating a positive or very positive outlook on market prospects.

SEB’s Latvian Housing Price Indicator hit a new high in February with 39 per cent of respondents in a survey forecasting higher housing prices in 12 months and only 13 per cent lower prices compared to today.

The year ahead is shaping up to be a good one for investors – providing they choose the right market. In the February Investment Outlook, released Tuesday SEB predicts overall global economic growth will average 4.5 per cent in 2011 and 2012 – well above the historical trend. Emerging markets will improve by 6.5 per cent and the industrialised OECD countries will end up just below 3 per cent, in both years. Watch Hans Peterson, head of Investment Strategy at SEB, review highlights from the report.

SEB’s housing price indicator in Latvia declined slightly in December but 38 per cent of the population still believe prices will rise over the coming 12 months. About 16 per cent believe prices will drop.

Estonia changed to the euro on 1 January 2011 and SEB's staff worked hard to make it a smooth transition. Here you can see what happened in the run-up to the actual changeover as well as comments from Riho Unt, head of SEB in Estonia.

It made news in every part of the world, from France to Indonesia and the US – with the New Year Estonia joined the eurozone. Also hitting the news was the SEB ATM where the first euros were officially withdrawn by Prime Minister Andrus Ansip.

Unlike the situation in some troubled Western European countries, budget consolidation in the Baltic countries is coming to an end after two year of belt-tightening policy. In the latest week, all three parliaments have approved the 2011 budgets.

SEB in Estonia has been working for more than a year to make sure the conversion from the kroon to the euro on January 1 goes without a hitch. A few minutes after midnight, ATMs will be ready to dispense the new currency and card payments will suffer only very minor downtime – less than five minutes.

Hans Peterson, head of Investment Strategy at SEB, comments on the latest issue of Investment Outlook released Tuesday.

Led by improved exports and increased domestic spending, the economies of Eastern Europe can expect moderate growth throughout the next two years, SEB states in the October Eastern European Outlook released today (5 October). One of the region’s hardest hit by the global credit crisis, recovery has been steady this year – in many cases better than in Western Europe – except in Latvia, which will post a decline of 1.5 per cent.

SEB’s latest Housing Price Indicator in Latvia reached 13.9 in September, the highest reading since the surveys started in May 2009. Around 32 per cent of respondents now say home prices will be higher in a year than they are currently while only 18 per cent believe that prices will fall.

The shift from one economic growth engine to another is occurring more sluggishly than desired: with private consumption and capital spending not successfully filling the void emerging as the positive effects of fiscal stimulus programmes and inventory build-up fade away. In Tuesday’s Nordic Outlook, SEB’s economists forecast that in the OECD countries, economic growth is expected to end up at 2-2.3 per cent during the next couple of years, or somewhat below trend. They also peg the probability of a new global recession at 25 per cent. Here you can hear Håkan Frisén, head of Economic Research at SEB, talk about some key items in the Nordic Outlook report.

SEB's Housing Price Indicator in Latvia is continuing up and jumped sharply to a positive 15.1 reading in July, indicating that twice as many Latvians are now forecasting rising prices compared to those who believe prices will drop in the coming year. But now development may slow, warns SEB's expert.

Since SEB published Nordic Outlook in early May, the crisis in the euro zone has led to increased uncertainty in the world economy and the bank is now revising its global growth forecast downwards. Meanwhile there are some bright spots and for example the Nordic region, particularly Sweden, stands relatively strong. SEB today raises the GDP of Sweden forecast significantly.

Hear Håkan Frisén, SEB's head of economic research, explain what's behind the changes.

Sweden had earmarked 8 billion Swedish kronor for a loan to Latvia during 2010. But a recent assessment from the International Monetary Fund and the European Commission suggest this loan may not be needed. Mikael Johansson, SEB’s expert on Eastern European economics comments on the situation.

Signals from the corporate world continue to improve on almost all fronts. The same largely positive picture emerges if looking at recent macroeconomic data, especially from the United States. However, focusing on the debt and budget deficit situation for European sovereigns, as the market has done over the last quarter, the picture is fairly bleak. Focusing on global risk appetite and political risks, the picture looks even worse. Read the latest issue of SEB's Nordic Credit Quarterly to find out more.

SEB's Housing Price Indicator falls to a ten month low at +27 in June compared to +41 in May. The euro zone debt crisis has started to weigh on households' sentiment. Households' repo rate expectations in the coming year are stable at one per cent.

Despite a historically high gold price there’s more to come and with the oil price hovering around 70 dollars per barrel a buying opportunity could well have opened up. Here you can hear SEB’s head of Commodities Research, Bjarne Schieldrop, share his views on the near-term prospects for commodities investments. 

SEB’s experts expect a commodity market rebound in the coming three months after the latest sell-off. In the latest issue of Commodities Monthly they however warn the rebound should be weaker than the market recovery in February.

The recent hard sell-off of some of the more sound and attractive currencies such as the Swedish krona and Norwegian krone following the intensification of the sovereign debt crisis has produced interesting opportunities for longer-term investors.

Optimism among Swedish CFO's is increasing. Swedish companies have been largely unaffected by recent sovereign unrest and financial market turbulence. In fact, according to Swedish CFOs, the business climate has improved significantly since our survey in February. Concerns regarding falling demand are decreasing and companies believe Asia will drive growth. More companies expect to increase staffing and profit expectations for 2010 remain high.

Here you can hear Ebba Lindahl, head of SEB Credit Research, talk about this and other findings from a recent survey among Swedish financial officers. 

SEB’s Latvian housing price indicator continued up in May and now stands at five, indicating more people believe prices will move up over the coming 12 months than people who believe in falling prices.

Prospects for investments in risky assets such as equities and corporate bonds are good during the coming year despite the fiscal problems in certain countries, writes SEB’s experts led by Hans Peterson in the latest issue of Investment Outlook.

In the May issue of Commodities Monthly SEB's experts say industrial metals prices look set to ease going into the second half of the year as Chinese construction activity slows down. Hear Bjarne Schieldrop, head of Commodities Research at SEB, talk about this and more in the filmclip below. Click the headline to access the full report.

The world economy is now entering a new phase, where differences in underlying conditions are becoming ever clearer. “Our main scenario is that the recovery will continue in spite of imbalances and crises,” says Håkan Frisén, head of SEB Economic Research in a comment to the latest Nordic Outlook released Tuesday.

SEB's Chief Economist Robert Bergqvist comments on the financial and macroeconomic implications from a recent meeting between the Euro-group countries regarding an aid package for Greece, and also on implications for the Nordic markets.

SEB’s Housing Price Indicator for the Swedish housing market rebounded to +35 in April after slumping to +29 in March.

A new survey commissioned by SEB shows that a majority of Swedes – 55 per cent – would vote no if a referendum on euro adoption was held today. That’s the highest figure on record.

Starting this week SEB issues loans of up to five million Lithuanian litas to small and medium sized companies in Lithuania in cooperation with the European Investment Fund. SEB plans to offer over 500 million litas in total loans under the programme.