1-5 years
A few years ago Sweden used to be one
of Europe’s strongest economies despite the recession and the financial crises, many nations in the European Union went through. Today the Swedish economy suffers and many experts fear that the country is facing a recession. Some
believe that Sweden will be the new Japan. In February 12th the Swedish Central
bank lowered its key repo rate by 0.1 bps to
-0.1 percent. By using this
monetary tool the Swedish Central bank is hoping for a recovery of the economy. In combination with the lower oil prices and
the weaker Swedish Krona a GDP growth is expected at a faster pace, which will
also lead to a stronger labor market. A
negative key repo rate will also lead to a rising household borrowing and higher
housing prices. But what if in 1-5 years from now the financial and monetary
stimulants fail? What would happen to the stock market?
I believe in 1-5 year from now that
Sweden will be in a recession. A huge part of the Swedish GDP is based on
export. A weaker Swedish Krona might help in this case. There needs to be a
holistic point of view. As Sweden, many of the countries that Sweden exports to
are facing the same problems and also lowering their interest rates. This will
leave the income from exports unchanged compared to previous years. Higher
unemployment will be expected and this will very likely lead to many unpaid
house loans. This in turn will cause a collapse in the housing market; problems
for the banks and a financial crisis will be expected. Unless the whole region, i.e. European market shows a remarkable growth Sweden will be facing a
recession.
6-60 years
In 6-60 years there will be new
improved technologies, some might help us to cure deceases others might take
over big parts of our jobs and leave us unemployed. These technologies will
definitely make our lives easier, but the question is; will everyone be able to
afford these technologies? What if these technologies lead to a high
unemployment rate? Who will financially benefit from this? As we know right now
1 percent of the world’s population owns 90 percent of the world’s assets. In
6-60 years from now, maybe the one percent will own more than 90 % of the
world’s assets. More poverty and wars will be expected. Hopefully a
reallocation of the world’s assets will be done. But I doubt that and the gap
between rich and poor will increase.
Maha El Khalil
