Transcript Slides - Riksbanken

The current
economic
situation
Jönköping March 2009
Deputy Governor
Svante Öberg
Summary




The financial turmoil worsened last autumn and
has developed into a global financial crisis.
International developments will be weak this year
and there is a considerable risk that economic
activity will be weak next year, too.
GDP growth in Sweden will be negative this year
and inflation will fall.
The Riksbank has cut the interest rate to 1 per
cent and may need to cut it further.
Contents




Financial market
International outlook
Sweden
Monetary policy
TED spreads
Basis points
500
500
Euro area
Lehman Brothers
450
450
USA
400
400
Secure liquidity
prior to year-end
Sweden
350
350
Bear Sterns
BNP Paribas
300
300
250
250
200
200
150
150
100
100
50
50
0
jan 07
0
apr 07
jul 07
okt 07
jan 08
apr 08
jul 08
Note. Spread between 3-month interbank rate and treasury bill rate.
okt 08
jan 09
Causes of the crisis





Global imbalances
Expansionary monetary policy
Credit rating agencies
Supervision
Regulatory frameworks
Management of the crisis





Liquidity supplied by central banks
ELA to individual institutions
Interest rate cuts
Guarantees and capital injections
Expansionary fiscal policy
Despite these measures the financial
markets are still functioning much less
efficiently than normal
Policy rate
Per cent
10
10
USA
9
9
UK
Norway
8
8
Euro area
7
7
6
6
5
5
4
4
3
3
2
2
1
1
0
0
00
01
02
03
04
05
06
07
08
09
Source: Reuters EcoWin
The Riksbank’s measures






Loans (against collateral) in SEK and USD
Change in collateral requirements
Special liquidity assistance
Commercial paper
Swap agreement
Repo rate has been cut
The Riksbank’s balance sheet
ASSETS
Gold
Foreign exchange
reserve
Lending in USD
Lending in SEK
Other assets
Total
30 June 08
26
31-dec-08
30
Change
4
158
0
4
4
192
200
196
266
7
700
42
196
262
3
508
108
0
0
0
59
25
192
112
207
49
189
59
84
700
4
207
49
189
0
59
508
LIABILITIES
Notes and coins
Fine-tuning
Riksbank Certificates
Debts to Fed
Own capital
Other
Total
Contents

Financial market
 International


Sweden
Monetary policy
outlook
Purchasing managers index,
manufacturing
Net figures, seasonally adjusted data
70
70
Euro area
USA
Sweden
60
60
50
50
40
40
30
30
01
02
03
04
05
06
07
08
09
Source: NTC Economics Ltd, ISM and Swedbank
Stock market developments
Index, 4 January 1999 = 100
250
250
Euro area (EuroStoxx)
Sweden (OM XS)
USA (S&P 500)
200
200
150
150
100
100
50
50
0
0
99
00
01
02
03
04
05
06
07
08
09
Source: Reuters
GDP
Annual percentage change
BNP
USA
Japan
Euro area
World
Growth and developing economies*
2008
1,3
0,0
0,8
3,4
6,3
2009
-2,0
-2,3
-2,0
0,4
3,3
2010
1,0
0,2
0,4
2,6
5,0
2011
3,2
1,6
1,7
3,9
* Note. The IMF’s forecast update 28 January 2009.
Sources: the IMF, the OECD and the Riksbank
Oil price
Brent crude, USD per barrel
140
140
Oilprice, outcome
Futures, average up to and including 4 February
120
120
Futures December
100
100
80
80
60
60
40
40
20
20
0
0
00
01
02
03
04
05
06
07
08
09
10
11
12
Sources: Intercontinental Exchange and the Riksbank
Commodity prices
USD, index, year 2000=100
350
350
Food
M etals
Other agricultural products
Total
300
300
250
250
200
200
150
150
100
100
04
05
06
07
08
09
Source: The Economist
Inflation
Annual percentage change
CPI
USA
Japan
Euro area (HICP)
2008
3,8
1,4
3,3
2009
-0,5
0,0
0,8
2010
1,8
0,5
1,4
2011
2,2
1,0
1,8
Source: the Riksbank
Growth picks up again in
2010
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

Forceful measures to stabilise the financial
markets
Expansionary fiscal and monetary policy
Low inflation
Risk of poorer developments





Reinhart and Rogoff
House prices and share prices
Production and employment
Public finances
Risk that 2010 will also be a year of very
weak growth in the world economy
Real house prices, USA
Index 1953=100
200
200
180
180
160
160
140
140
120
120
100
100
80
80
60
60
40
40
20
20
0
0
50
55
60
65
70
75
80
85
90
95
00
05
10
Sources: S&P Case-Shiller (1986-), OFHEO (-1986), U.S. Bureau of Labor
Contents


Financial market
International outlook
 Sweden

Monetary policy
Exports falling
Annual percentage change, seasonally-adjusted data
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
New orders, export market
Export of goods
-20
-25
80
82
84
86
88
90
92
-20
-25
94
96
98
00
02
Note. Three-month moving average, exports of goods in fixed prices calculated by the Riksbank.
Sources:
04
06
08
Statistics Sweden and the Riksban
Confidence indicator and
PMI for manufacturing sector
Net figures, seasonally adjusted data
65
30
60
20
55
10
50
0
45
-10
40
-20
35
-30
Purchasing managers' index (left scale)
Confidence indicator (right scale)
30
-40
01
02
03
04
05
06
07
08
09
Sources: National Institute of Economic Research and Swedban
GDP
Annual percentage change, calendar-adjusted data
5
Sweden
Euro area
4
5
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
-3
-3
00
01
02
03
04
05
06
07
08
09
10
11
Sources: Eurostat, Statistics Sweden and the Riksban
GDP forecast
Per cent, quarterly averages
8
8
90%
75%
50%
GDP
February
September
7
6
5
7
6
5
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
04
05
06
07
08
09
10
11
Note. Uncertainty band from forecast in September 2008. Broken lines represent the Riksbank’s forecasts.
Källa:
Riksbanken
Number of persons employed
1000s, seasonally-adjusted data
4700
4700
Employed aged 16-64
Employed aged 15-74
February
December
4600
4600
4500
4500
4400
4400
4300
4300
4200
4200
4100
4100
00
01
02
03
04
05
Note. Broken lines represent the Riksbank’s forecasts.
06
07
08
09
10
11
12
Sources: Statistics Sweden and the Riksbank
Unemployment
Percentage of labour force, seasonally-adjusted data
14
14
Unemployment aged 16-64
Unemployment aged 15-74
Febryary
December
12
12
10
10
8
8
6
6
4
4
2
2
0
0
80
82
84
86
88
90
92
94
Note. Broken lines represent the Riksbank’s forecasts.
96
98
00
02
04
06
08
10
12
Sources: Statistics Sweden and the Riksbank
Resource utilisation
Estimated gap, percentage deviation from HP trend
5
5
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
-3
-3
GDP
Hours
Employment
-4
-5
80
85
-4
-5
90
95
Note. Broken lines refer to the Riksbank’s forecasts.
00
05
10
Sources: Statistics Sweden and the Riksbank
CPI and CPIF
Annual percentage change
5
5
CPI
CPIF
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
00
01
02
03
04
05
Note. Broken lines represent the Riksbank’s forecasts.
06
07
08
09
10
11
12
Sources: Statistics Sweden and the Riksbank
CPI forecast
Annual percentage change
6
6
90%
75%
5
5
50%
4
4
CPI
September
3
3
February
2
2
1
1
0
0
-1
-1
-2
-2
04
05
06
07
08
09
10
11
Note. Uncertainty band from forecast in September 2008. Broken lines refer to Riksbank’s forecasts.
Source:
the Riksbank
Unit labour costs
Whole economy, annual percentage change
7
Unit labour cost
Productivity
Labour cost per hour
6
7
6
5
5
4
4
3
3
2
2
1
1
0
0
-1
-1
94
96
98
00
Note. Broken lines represent the Riksbank’s forecasts.
02
04
06
08
10
Sources: Statistics Sweden and the Riksbank
Exchange rates
SEK per EUR respective USD
12
12
SEK/ EUR
11
SEK/ USD
11
10
10
9
9
8
8
7
7
6
6
5
jan-06
5
jul-06
jan-07
jul-07
jan-08
jul-08
jan-09
Source: Reuters EcoWin
Contents



Financial market
International outlook
Sweden
 Monetary
policy
Repo rate forecasts
Per cent, quarterly averages
5
5
February
December
4
4
3
3
2
2
1
1
0
0
04
05
06
07
08
Note. Broken lines refer to the Riksbank’s forecasts.
09
10
11
12
Source: the Riksbank
Different measures of inflation
Annual percentage change
5
5
CPI
CPIF
CPIF excluding energy
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
00
01
02
03
04
05
Note. Broken lines represent the Riksbank’s forecasts.
06
07
08
09
10
11
12
Sources: Statistics Sweden and the Riksbank
Inflation expectations
Annual percentage change
3,5
3,5
2 yeras
3,0
3,0
5 years
2,5
2,5
2,0
2,0
1,5
1,5
1,0
1,0
0,5
0,5
0,0
0,0
96
Note. All agents
97
98
99
00
01
02
03
04
05
06
07
08
09
Source: Prospera Research AB
Competition-weighted exchange
rate
Index, 18 November 1992 = 100
155
155
TCW-index
TCW forecast February
150
150
TCW forecast December
145
145
140
140
135
135
130
130
125
125
120
120
04
05
06
07
Note. Broken lines refer to the Riksbank’s forecasts.
08
09
10
11
Source: the Riksbank
Summary




The financial turmoil worsened last autumn and
has developed into a global financial crisis.
International developments will be weak this year
and there is a considerable risk that economic
activity will be weak next year, too.
GDP growth in Sweden will be negative this year
and inflation will fall.
The Riksbank has cut the interest rate to 1 per
cent and may need to cut it further.