For house prices the average fall in real terms is 35 per cent over a six-period and for shares it is 55 per cent over three and a half years. •  Secondly, financial crises are associated with large declines in production and employment. On average, GDP per capita falls by 9 per cent over two years and unemployment rises by an average of 7 percentage points over four years. •  Thirdly, national debt almost doubles, but not primarily as a result of the costs of recapitalising the financial system. Instead, the main causes are reduced tax income and costs for fiscal policy stimulation. Experiences from earlier financial crises thus show that they are usually followed by a prolonged period of low growth and falling employment, falling asset prices and a substantial deterioration in public finances. This time the crisis is a global one, while most of the earlier crises have been of a national or regional nature. In my opinion, this indicated at the most recent monetary policy meeting that there is a risk that the economic downturn will be more prolonged than in the main scenario and that 2010 will also be a year of weak growth in the world economy. An important condition for growth in the world to pick up again is that the situation in the world’s largest economy, the United States, stabilises and in particular that the US housing market shows an upturn.
BIS Review 25/2009  5  Several companies state in the Riksbank’s company survey, which was carried out in December and January, that they have not experienced such a sudden slowdown in the economy as during the final months of 2008. The companies also say that they have found it increasingly difficult to finance their operations. But no clear credit crunch is yet visible in the official financial market statistics. Lending to companies increased by 0.3 per cent in January compared with the previous month and by 10.6 per cent compared with the same month last year. Our most recent forecast is that GDP will fall by 1.4 per cent this year. Towards the end of the year GDP is expected to begin to rise again. But as with international economic activity, there is a substantial risk that Swedish developments will also be poorer than in our main scenario. The GDP forecast for this year has been revised down substantially since last autumn. In September 2008 the Riksbank forecast growth this year of 0.9 per cent. It is very rare that forecasts are changed so much in such a short time. The revision is way outside the 95 per cent confidence interval that usually applies to our forecasts. It is also the reason why monetary policy has changed so radically since last autumn. The weakened economic activity is now also having an increasingly clear effect on the labour market. Employment has begun to fall and unemployment has begun to increase.