If, for instance, the perception is that monetary policy has been conducted in the wrong way and led to a poor economic outcome, this will in my view make it more difficult to deal effectively with the risks linked to household debt when looking ahead. The reason for this is that I believe that monetary policy must play at least some role in this context. A fairly good development since the crisis So, how has the Swedish economy actually developed since the financial crisis broke out just over five years ago? The current debate gives rather mixed impressions, ranging from things having gone quite well to things having gone rather badly. If we look at the data, however, there is no doubt that Sweden has had a relatively good real economic development. We compare favourably to the countries we usually use as benchmarks (see Figure 1). Sweden is one of the relatively few countries where GDP per capita is higher now than it was prior to the crisis. The employment rate – the percentage of the working-age population in employment – has also held up well. Only few countries have had a better development with regard to both GDP and employment (that is, lying above and to the right of Sweden in Figure 1). Some stress that the development of unemployment has been less favourable. But here we must take into account that the labour force in Sweden has increased relatively substantially during the period (see Figure 2).
Private investment activity has also resumed following a period of excess capacity due to overinvestment prior to the Asian financial crisis. There are also plans for massive investment in infrastructure development in the region. While Asia has the internal capacity from its high savings to finance these investments, the resulting higher import demand that these investments will generate will contribute to the further unwinding of the global imbalances. This stronger domestic consumption and investment demand in Asia is also being supported by the strengthened and more developed financial systems. The relatively low level of leverage of the corporate sector and the continued access to financing support this trend. While regional economic integration has always been part of the Asian economic landscape, regional financial integration has been a more recent phenomenon. While regional financial integration will facilitate the already strong trade and investment linkages in the region, a more important aspect of financial integration for Asia is that it will facilitate a more efficient intermediation of funds within Asia. Asia’s more developed financial markets and continued initiatives to liberalise the financial sector will also strengthen inter-linkages with both the traditional financial markets and with new financial centres in other emerging economies. Going forward, products from Asian financial markets can be expected to increasingly assume greater importance as an asset class. It will thus increase the potential for the diversification of risks and contribute towards stability of the international financial system.