Wednesday, the latest Inflationary Expectations survey for Sweden showed that inflation and gross domestic product growth expectations in the one and the two-year perspective have tumbled since the previous survey, a report from research agency TNS Prospera revealed.
"Zero-growth and inflation slightly above the "tolerance floor" is the overall assessment for the year to come", the report said.
Decline was also witnessed in the wage increase expectations. That said, the survey found that an economic recovery with its ensuing inflation effects is expected to happen after the next twelve months.
Inflation is seen at 1.1% for the first year and at 1.5% for two years, according to the survey. After stagnation in the first twelve months, the GDP is expected to record 1.1% growth in two years.
In the October survey, inflation was seen at 3.2% for the first year and 2.8% in two years time. GDP was expected to rise 1.8% in the first twelve months and 2.1% in two years.
Further, the survey participants predicted a 0.5% reduction in Riksbank's benchmark, the repo rate within a 3-month horizon to 1.5%. Meanwhile, expectations of money market players were more aggressive. They expect the repo rate to fall to 1.3% in three months time.
With regard to currencies, the EUR and USD rates forecasts are substantially higher, compared to SEK, than were expected last survey, the report said. "The trend is however clear; SEK is believed to strengthen".
TNS Prospera conducts the survey on behalf of Sveriges Riksbank, four times a year, aiming to track inflationary and wage increase expectations in Sweden among labour market parties, purchasing managers and money market players. The survey also maps expectations of future GDP-growth and repo rates, for money market players also the five-year government bond rate, the SEK/EUR and SEK/USD rates.
Thlabore latest survey was carried out between January 12 and 22.
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