Financial Outlook with Johan Löf, Handelsbanken

On Wednesday 5 April, the BSCC had the pleasure of hosting a financial outlook with Handelsbanken at their office in Stockholm. The economic and real estate outlook was given by Johan Löf, Head of Forecasting and Senior Economist at Handelsbanken. Prior to joining Handelsbanken, Johan worked at both the Riksbank and the Ministry of Finance.

The event focused on the current macroeconomic situation as well as the real estate markets of Sweden, UK and wider Europe.

  • Inflation is still high, and Handelsbanken expects the Riksbank and other central banks to not only increase interest rates but also remain at a higher level for some time. This is so that the inflation, once starting to decrease, keeps doing so and not relapse due to too early easing.
  • Rates to decrease in 2024.
  • Inflation to fall back later this year.
  • Although world trade renders less weak than anticipated, with some countries barely avoiding a recession, Sweden is doing relatively poorly and might enter a recession this year.
  • In real estate markets we see a drop in house prices in both UK and Sweden that are believed to continue throughout this summer. Firstly, due to the tougher situation for households. Secondly, because the building companies struggle to finance their projects at the same time as it is less profitable.

As a final note, Johan addressed concerns that higher interest rates might kill the economy. That notion is based on too simplified premises, he argues. Higher interest rates do not automatically mean a worse situation for everyone. The economy is more heterogenous than we think; everyone is not deeply indebted and fatally vulnerable to higher interest rates. The Riksbank and others, will raise interest rates and do so cautiously as we move forward to tame the historically high inflation.

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