BIS Review 7/2009  9  TED-spreads Difference between interbank rates and government bond rates (TED-spread) 500  500 Euro area  450  USA  400  Sweden  BNP Paribas  Lehman Brothers  Secure liquidity prior to the year-end  350  450 400  Bear Sterns  350  300  300  250  250  200  200  150  150  100  100  50  50  0 Jan-07 Apr-07 Jul-07  0 Oct-07 Jan-08 Apr-08 Jul-08  Oct-08 Jan-09  Sources: Reuters Ecowin and the Riksbank  Outcome up to 16 January. Exports as a proportion of the total balance of resources Per cent 50  40  30  20  10  0 90  10  92  94  96  98  00  02  04  06  BIS Review 7/2009  5-year rates Per cent 6.00  6.00  5.00  5.00  4.00  4.00  3.00  3.00  2.00  2.00  1.00  1.00  0.00 01 January 2008  0.00 01 April 2008  01 July 2008 Sweden  01 O ctober 2008  Euro area (Germany)  01 January 2009  US  Note: Refers to government bonds with approx.
However, the Riksbank’s assessment is that the weakening of the krona is temporary and primarily a result of the financial crisis. In times of financial turbulence investors tend to turn to the larger currencies, which are regarded as "safer”. The result of this flight to quality is that smaller currencies like the Swedish krona weaken. The Norwegian krona has also depreciated substantially. But there is a risk that this weakening will be more prolonged. This would normally lead to exports strengthening and imports slowing down, and at the same time provide an inflationary impulse. During a normal economic downturn it may be an advantage that the currency depreciates in this way and thus dampens the downturn. In the current circumstances, with a serious global financial crisis that may result in financing problems for entire countries, the situation may become more problematic. Several countries in Europe, in addition to Iceland, have seen their currencies depreciate substantially. In December the forecast was that GDP will decline by 0.5 per cent during 2009, but that growth will recover in 2010. The information received since then indicates that GDP growth in the fourth quarter of last year was weaker than we had been expecting, which will also push down the average for the year 2009. Industrial production, production of services and the activity index all fell in November. The National Institute of Economic Research’s Economic  8  BIS Review 7/2009  Tendency Survey and the purchasing managers’ index continued to fall in December, reaching all-time lows.