Spanish banks to get €150bn in support – SEB
Sweden’s SEB says in its latest Nordic Outlook report that it expects Spanish banks to tap into €150bn of recapitalisation funds, and that the European Investment Bank (EIB) will source an additional €50bn in order to fund up to €300bn worth of growth focused infrastructure projects around Europe.
SEB takes a downbeat view of the global economy, saying the growth seen during the first quarter is easily dented, and that despite some stabilising of the US economy that alone is not enough to lift the global economy.
The problem remains debt loads and credit contraction in the West, as well as questions around the future of the European single currency. Additional support measures are required, as is seeing through the ones already announced, in order to sustain a reasonable level of global growth, the report said.
Less focus on savings and more focus on growth suggests a change of EU crisis strategy, and therefore the beginning of the end of the recently agreed financial treaty. The OECD countries will grow 1.6% in 2012 and 2.1% in 2013, according to SEB’s forecast.
That low growth environment will keep inflation down, it added. Sweden currently is in a period of slow growth, with GDP growth of just 0.7% this year and 1.9% in 2013. This is not helped by what SEB terms “an unnecessarily tight financial policy” pursued by the centre-right government.
With unemployemnt expected to hit 8% in 2013 and niflation between 1-1.5% there is room for Sweden’s central bank to cut interst rates, SEB said. Its forecast now is for another cut to the key rate by September, down to 1.25% where it should remain through 2013.