At the same time, we can conclude the opposite with regard to the inflation forecasts (OH 2 inflation forecasts 1998-2002), which we have been forced to revise upwards again and again. If we are right that a recovery is now beginning both in Sweden and abroad, we can conclude that the economic downturn was one of the mildest of the post-war period, partly as a result of resolute stabilisation policy. However, the slowdown in Sweden and the rest of the world during 2001 was unexpectedly severe in relation to the forecasts made in 2000. The fact that forecasters miss turning points in the economic cycle is not unique to this particular downturn, but quite a common phenomenon. I will return to the current situation, but first a look back in time. Historical patterns are repeated Is it possible to learn lessons from history? Both yes and no. If one studies economic slowdowns over the past three decades, one can see that they differ considerably both with regard to causes, sequence of events and recovery. There is no simple, cyclical pattern that is automatically repeated. At the same time, it is clear that what we have experienced now has elements in common with 1 previous cycles. In some industrial nations, including the USA, the economic downturns during the 1990s have become milder compared with the downturns during the 1970s and early 1980s. Deep recessions have been unusual and arisen in combination with major structural problems, such as bank crises.
What really counts is the direction for monetary policy on the basis of the information available at the time the decision is taken, not what should have been done if it had been possible to predict the future with perfect accuracy. When we experience major disturbances or changes in the economy, we cannot merely concentrate on the effects on prices. Let me illustrate this with reference to oil prices. If we assume that oil prices rise. Inflation rises, which means that real wages fall, partly as a result of petrol and heating oil becoming more expensive, which means that consumers have less money over to spend on other goods. This leads to a decline in demand and thereby in prices on other goods. Higher oil prices can thus lead to both rising prices and lower demand, which in the long term will once again subdue inflation. It is difficult to predict oil prices as they do not always reflect the demand and supply situation, but are also connected to politics. The current situation can illustrate this difficulty. Are oil prices rising because the increase in global demand and growth is higher than was assumed, or is the political uncertainty in the Middle East the most important factor? What is the resource situation within the economy? A price rise that occurs when resource utilisation is on its way down can lead to a rapid and profound decline.