Sweden’s government raised its growth forecast on Friday, saying the economy recovered faster than expected in the first half of this year.
Swedish Finance Minister Anders Borg revised his forecast for this year’s Swedish GDP growth to 4.5 percent from the previously expected 3.3 percent.
The minister also upgraded his outlook for next year to 4 percent, from 3.8 percent, and said he expects to reach the target of a 1 percent public finance surplus by 2012.
Sweden holds parliamentary elections on Sept. 19. Considering the strong public finances, the center-right governing alliance said it sees room for tax reforms of 10 billion kronor (US$1.4 billion) next year, if it is re-elected.
Borg said additional tax reforms may also be possible toward the end of the next four-year mandate period, but said the government should be cautious not to promise too much.
“The GDP growth is strong. But the risks are big, primarily if we look at the world around us, where many countries have very big problems with their public finances,” Borg said in a statement.
“Our highest priority is to return to a surplus to be able to defend Sweden against new threats,” he said.
Meanwhile, France has cut its growth forecast for next year to 2 percent from 2.5 percent, French President Nicolas Sarkozy’s office said on Friday, after he met senior economic officials.
A government statement said it expects France’s GDP to “meet or exceed” this year’s target of 1.4 percent, but that economic growth next year would be slower than had been hoped.
The government has pledged to narrow the public deficit, covering central and regional government spending along with social welfare, from a record 8 percent of GDP this year to 6 percent next year.
However, at the same time, Sarkozy has promised not to raise general taxation.
Friday’s statement promised to abolish around 10 billion euros (US$12.1 billion) per year in tax breaks for specific groups and professions.
Public spending will be frozen, by maintaining a policy of replacing only one retiring public servant in two.
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