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ECONOMY

Auto sales race ahead for March

Germany's giant auto economy continued to roar ahead in March, the sector federation VDA said Monday, with an 11-percent-jump in new car registrations compared to the same period last year.

Auto sales race ahead for March
Photo: DPA

Buyers snapped up 328,100 new cars in Europe’s top economy last month, the VDA said in a statement. During the first three months of the year, more than 750,000 cars were sold, an annualised gain of 14 percent.

Car exports also accelerated, according to the VDA, with 1.16 million sent abroad in the first quarter, a rise of 11 percent.

Nevertheless, the crisis in Japan, as well as a spike in oil prices due to unrest in the Middle East, presents a sizeable risk for the sector, the VDA said, warning that the road ahead was “full of obstacles.”

“The news from Japan is overshadowing everything else. But our members are also watching carefully how raw material prices are developing, including oil,” the association said.

“There are also inflation risks in emerging economies that we are monitoring closely.”

AFP/ka

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ECONOMY

Swedish economy to grind to a halt as interest rates kick in

Sweden faces an economic slump next year that will see economic growth grind to a complete stop, Sweden's official government economics forecaster, has warned.

Swedish economy to grind to a halt as interest rates kick in

Sweden’s National Institute of Economic Research, which is tasked with tracking the business cycle for the Swedish government, warned in its quarterly forecast on Wednesday that greater than expected energy prices, interest rate rises, and stubborn inflation rates, Sweden was facing a significant downturn. 

The institute has shaved 1.6 percentage points off its forecast for growth in 2023, leaving the economy at a standstill, contracting -0.1 percent over the year. 

The institute now expects unemployment of 7.7 percent in 2023, up from a forecast of 7.5 percent given when in its last forecast in June.

“We can see that households are already starting to reign in their consumption,” said Ylva Hedén Westerdahl, the institute’s head of forecasting, saying this was happening “a little earlier than we had thought”. 

“We thought this would have happened when electricity bills went up, and interest rates went up a little more,” she continued. 

The bank expects household consumption to contract in 2023, something that she said was “quite unusual” and had not happened since Sweden’s 1990s economic crisis, apart from in the immediate aftermath of the Covid-19 pandemic. 

This was partly down to a five percent reduction in real salaries in Sweden in 2022, taking into account inflation, which the institute expects to be followed by a further two percent fall in real salaries in 2023. 

If the incoming Moderate-led government goes ahead with plans to reimburse consumers for high power prices, however, this would counterbalance the impact of inflation, leaving Swedish households’ purchasing power unchanged. 

The institute said it expected inflation to average 7.7 percent this year and 4.6 percent in 2023, both higher than it had forecast earlier.

Sweden’s Riksbank central bank this month hike its key interest rate by a full percentage point, after inflation hit 9 percent in August, the biggest single hike since the 1990s. 

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