But I think that the situation on the Swedish housing market is still very uncertain. Weaker developments than in our forecast pose a significant risk to the Swedish economy. Those components of domestic demand that would be negatively affected first of all would be housing investment and household consumption. But as I am here at the Swedish Property Federation today, I would also like to mention that the weaker developments on the housing market since last autumn have not escaped housing developers. You can read more about this in an article in our Financial Stability Report, published in November. 16 An important conclusion we can draw from developments in recent years is that housing developers have burdened households with substantial risks during the building process. In  16  See “The new production of housing and financial stability”, article in Financial Stability Report 2018:2. 12 [13]  the prevailing market situation, these risks have come to the fore, causing households’ interest to wane, especially when move-in dates to new homes are far-off in the future. This will require modified business models in order to rekindle the interest of prospective house-buyers in newly built homes. My assessment is also that newly built homes are currently far too expensive for many groups. Cheaper new builds and better turnover in the housing stock could help untangle this knot. There are of course many uncertainty factors not only surrounding future economic developments, but also surrounding inflation.
But at the macro-economic level what we have to remember is that every dollar earned is a dollar available to be spent or reinvested back into the economy, whoever earns it. So, at the macroeconomic level, competition – the driver of economic progress – is a positive sum game; it increases the potentially sustainable growth rate nationally, regionally, and internationally. How far each country individually is able to take advantage of this increased potential depends upon how flexibly it can adapt to changes in comparative productive advantage – which in turn depends upon the supply–side characteristics of our separate economies. But there is no doubt that we all stand to benefit. That is why I have always believed fundamentally in the principle of free trade and open capital markets which enhance  1  BIS Review 54/1999  competition. It is why I have always welcomed the rapid growth we have seen in the emerging market economies – and why incidentally I look forward to China’s accession to the WTO. We cannot then sensibly aim to obstruct structural changes. But nor can we realistically hope to avoid all shorter-term fluctuations, associated with the business cycle for example or as a result simply of random shocks. What we are looking for is a stable macro-economic framework for the economy as a whole, which will help to moderate rather than aggravate shorter-term fluctuations, and one within which change can occur in response to longer-term real economic factors, undistorted by unnecessary, erratic, movements particularly in nominal values.