Spoiler: In a previous post I argued that the lower growth of Swedish GDP per capita is a consequence of our own choice. As our incomes grew over time, we began to consume more services instead of goods. The shift in demand led to a reallocation of labour and capital from the more productive goods-producing industries to services. Thus, Services industries share of GDP has increased over time at the expense of Manufacturing industries. This led to decreasing growth rates. Furthermore, the reallocation of capital from Manufacturing to Services reinforced this decrease of growth rates. This development is a consequence of increasing prosperity.
As incomes have grown, we have chosen to work less. We have also chosen to have fewer children and smaller families. That has over time led to fewer people in the working ages supporting an increasing share of older people. It has also led to relatively fewer young people filling the ranks of the working population.
To prevent GDP per capita growth from stagnating, we need more people that work longer. But reversing declining fertility rates is not easy and increasing immigration can only help temporarily. To prevent GDP per capita growth, ee need to increase productivity growth.
Spoiler: Swedish industries are moving towards a recession. The Diffusion Index has declined since its peak it May 2021. Even though it is fluctuating above zero, it is declining indicating that production in an increasing number of industries is declining compared to twelve months earlier. The Diffusion Index shows the development until August 2022.
The developments for especially Service industries are negative reflecting pessimistic expectations of future income. Also, developments of individual manufacturing industries are declining. Production in the intermediate goods industries, especially its energy-intensive part, is declining. Production in the durable goods industries is also declining reflecting expectations of lower future incomes and higher interest rates.
A high inflation and declining production indicate that the economy might be heading towards stagflation. A tighter monetary policy which is needed to curb inflation will have adverse effects on employment and production.
I korthet: detta inlägg publicerades som en insändare av Sydöstran den 24/9.
This post was published by the newspaper linked to above on 24 September. An English version is available below the Swedish text:
Ordet russofobi uppfanns som bekant av den forna Tsarregimen för att vifta bort mot de övergrepp som den utsatte den egna befolkningen för.
egreppet används flitigt av den nuvarande putinregimen som svar på regimens brott mot internationell rätt sedan den inledde kriget mot Ukraina 2014. Regimens ständiga tjatande om russofobi är patetiskt. Det används inte av demokratiskt valda regeringar. Ingen svensk regering skulle få för sig att kalla utländska kritiker för ”swefober”.
Published by Stockholm Free World Forum 10 September 2022
After failing to capture Kyiv, the Kremlin focused its efforts on seizing and holding Donbas region and the south of Ukraine. In Donbass, Kremlin’s scorched-earth tactics have recently stalled. Russia’s slow advance in Ukraine combined with substantial military casualties mean that Putin desperately needs a pause in the war to regain his army’s weakening strength. This may temporarily freeze the conflict, but it will not bring a permanent peace to Europe. Despite recent setbacks, Putin has not given up his hopes to destroy Ukraine and restore Russia’s influence on the territories of the former Russian empire. To prevent another war, Russia must be decisively defeated and forced to abandon its imperial ambitions argues Dr. Olena Stavrunova and Mats Marcusson.