Completed: November 7, 2019, 07:30 Distributed: November 7, … · 2019. 11. 7. · Chief Economist Latvia [email protected] +371 6744 58 44 Agnese Buceniece Senior Economist

Completed: November 7, 2019, 07:30

Distributed: November 7, 2019, 08:00

Anna Breman

Global Head of Macro Research Group Chief Economist [email protected] +46 70 314 95 87

Andreas Wallström

Head of Forecasting Deputy Head of Macro Research Sweden andreas.wallströ[email protected] +46 8 700 93 07 Robin Ahlén

Economist [email protected] +46 8 700 93 08 Cathrine Danin

Senior Economist [email protected] +46 8 700 92 97 Jana Eklund

Senior Econometrician [email protected] +46 8 5859 46 04 Josefin Fransson

Assistant [email protected] +46 8 5859 03 05 Knut Hallberg

Senior Economist [email protected] +46 8 700 93 17 Maija Kaartinen

Economist [email protected] + 46 8 700 92 73 Maria Wallin Fredholm

Economist [email protected] +46 8 700 92 87

Øystein Børsum

Chief Economist Norway Chief Credit Strategist [email protected] +47 91 18 56 35 Kjetil Martinsen

Head of Rates and FX Strategy Norway [email protected] +47 92 44 72 09 Marlene Skjellet Granerud

Economist [email protected] +47 94 30 53 32

Heidi Schauman

Chief Economist Finland [email protected] +358 503 281 229

Tõnu Mertsina

Chief Economist Estonia [email protected] +372 888 75 89 Liis Elmik

Senior Economist [email protected] +372 888 72 06 Marianna Rõbinskaja

Economist [email protected] +372 888 79 25

Līva Zorgenfreija

Chief Economist Latvia [email protected] +371 6744 58 44 Agnese Buceniece

Senior Economist [email protected] +371 6744 58 75 Laimdota Komare

Economist [email protected] +371 6744 42 13

Nerijus Mačiulis

Deputy Group Chief Economist Chief Economist Lithuania [email protected] +370 5258 22 37 Greta Ilekytė

Economist [email protected] +370 5258 22 75 Vytenis Šimkus

Senior Economist [email protected] +370 5258 51 63

Recording date of price data 2019-11-05.

Swedbank Economic Outlook is available at www.swedbank.se/seo.

Layout:

Jana Eklund

Macro Research, Swedbank

Images:

Getty Images

Introduction ____________________________________________________________________ 4

Global overview _________________________________________________________________ 5

USA ___________________________________________________________________________ 8

Euro area ______________________________________________________________________ 8

United Kingdom _________________________________________________________________ 9

Sweden ______________________________________________________________________ 10

Nordics ______________________________________________________________________ 12

Baltics _______________________________________________________________________ 12

China and India: Key for the climate and a green export opportunity ____________________ 13

Appendix_____________________________________________________________________ 15

http://www.swedbank.se/seo

Swedbank Economic Outook | November 2019 | 5

GLOBAL OVERVIEW

The main scenario in this forecast update is that global growth will remain low going forward. In

general, the revisions, compared with the August forecast, are small. While the forecast for the euro

area and the UK is higher, some emerging markets, including India and Brazil, are revised downwards.

For our home markets, the Nordic and Baltic regions, growth is expected to be modest for both 2020

and 2021.

An important reason for the slowdown in global activity that we have seen during 2019 is the

protracted trade dispute between the US and China, where uncertainty is keeping investments in

check. Both parts surely would like to avoid further economic damage, but China will likely not meet

the demands from the US to change its state-controlled economic model. We therefore don’t expect a

significant agreement during the forecast period – but not an escalating conflict either.

Another reason for the lower global growth is the slowdown in China, which is due to not only the

trade conflict but mainly domestic, structural, factors. We expect growth to further decline going

forward. GDP growth below 6% is presumably acceptable as long as the labour market doesn’t suffer

too much. The government can then continue prioritising financial stability and the shift to a more

consumption- and services-based economy. It still looks like the goal to double(!) the economy bet-

ween 2010 and 2020 will be reached. The government is expected to continue to support economic

development with some stimulus. Not until the slowdown is worse, e.g., if the trade war escalates

further, would we expect to see a major stimulus.

6 | Swedbank Economic Outook | November 2019

GLOBAL OVERVIEW

Interest rates have picked up somewhat from the record-low levels noted in August. The increase has

probably been driven by somewhat reduced downside risks to the global economy. During the past

few months, there have been signals that the trade conflict between the US and China at least will

not escalate, and perhaps even that a mini-deal may be reached in some areas. Also, the risk of a hard

Brexit has decreased. These factors have also lowered the expectations of further easing from many

central banks.

During the forecast horizon, we expect the same forces as above to lift interest rates somewhat

higher. We predict largely unchanged monetary policy in most developed countries, such as the US,

the euro area, the UK, Norway, and Sweden. The rise in interest rates will, however, be modest as the

uncertainties regarding the global outlook are expected to stay. In addition, there are many structural

factors holding down interest rates in the years to come.1 A factor that has the potential to lift

interest rates more markedly, is a more expansionary fiscal policy in Europe. It cannot be ruled out

that countries that so far have been spending cautiously will eventually be tempted by the low

financing costs.

An environment with somewhat higher yields and larger risk appetite is also expected to have

effects on the foreign exchange markets. We forecast that the U.S dollar will depreciate somewhat

against the euro later in the forecast horizon. In this situation, both the Norwegian krone and

Swedish krona could gain value. The two Scandinavian currencies have developed very weakly over

the past few years and are, from a historical perspective, undervalued. Notably, the krone recently hit

its lowest value ever against many currencies, despite the relatively hawkish stance of Norges Bank

over the past year. We expect only a marginal appreciation of the krone and krona over the forecast

horizon, and, thus both currencies will remain weak.

1 See, for instance, our analysis on this, Longer lives - lower yields, from March 2019.

https://research.swedbank.se/default.aspx?cdguid=2F2635A0-DE3E-4943-9F12-957663FE55A8


GLOBAL OVERVIEW

Our main scenario is surrounded by uncertainties, and there are both up- and

downside risks. Below, we elaborate on two alternative scenarios: a bright one

and a dark one.

In a bright scenario, positive signals from the trade conflict between the US

and China will lead to a turnaround in sentiment indicators from the current,

much-suppressed levels. The US economy holds up well, thanks to the rate cuts

by the Federal Reserve. In Europe, a more expansionary fiscal policy will lift

domestic demand. In all, this means that the ongoing global slowdown will be

limited to the manufacturing sector, which also turns to the better in 2020.

The more upbeat global outlook will benefit the Nordic and Baltic countries.

Annual GDP growth in the Nordics will be at 2% or above in 2020, which can be

compared to around 1% in the main scenario. In the Baltics, growth picks up to

3-4%, compared with the 2.0-2.5% in the main scenario. The labour markets

are improving in all countries.

In a dark scenario, the lasting downturn within global manufacturing is

spreading to other sectors in the economies. Employment is falling, and

unemployment rises in most EU countries as well as in the US. Despite

aggressive rate cuts from the Federal Reserve to zero percent, and a restart of

the bond-buying programme, profit expectations decline and equity markets

suffer. Increased tensions on financial markets pull up credit spreads.

Households in Europe and the US turn more cautious, which weighs on

consumption. Weak governments do not manage to pass easing measures that

would support the economies.

The open and trade-dependent Nordic and Baltic economies stagnate or fall

into recession. Employment is falling, and unemployment rises sharply.

Stressed financial markets lead to higher mortgage rates, which, in turn, lower

house prices. Monetary policy is largely already exhausted and cannot provide

further support to any meaningful extent. Fiscal policy may provide support in

some countries, but in most cases such support will be too late and too little.


USA AND EURO AREA

Growth has dropped, and indicators suggest further weakening ahead. Companies are hesitant to

invest despite the low interest rates. At the same time, the labour market has stayed strong and

households so far aren’t spending less, but, going forward, employment and consumption growth are

likely to fall. The slowdown in the economy will be fairly mild, however. Consumers are still in a

strong financial position, aided by falling mortgage rates.

Despite positive signs about the trade conflict between the US and China, we don’t expect to see a

significant deal in the forecast period. Tensions between the two countries will presumably continue,

which means further uncertainty and lower economic activity. The presidential election next year

could be of importance, but we expect a solution to take time regardless of the outcome. Even if the

election leads to a less protectionist administration, it won’t be in place until early 2021, and it will

probably take time before a settlement with China can be reached. As a result, we anticipate

continued uncertainty about trade policy for the entire forecast period.

Weaker economic and inflation signals are partly why the US central bank (the Federal Reserve) has

modified monetary policy. So far, the Fed has cut interest rates three times in 2019. Neither the

labour market nor inflation at a first glance support a turnaround. Unemployment is the lowest in 50

years, and the employment rate for those aged 25-54 is as high as it was before the financial crisis.

While inflation is very close to the 2% target, the Fed seems to be looking ahead and at the

uncertainty surrounding economic development, as well as the falling inflation expectations. Several

members have also said that they don’t have a big problem with overshooting the target slightly.

Taken together, we expect another rate cut during the first quarter of 2020, which would put the

target range for the Fed funds rate at 1.25-1.50%. If development is worse than we forecast, there

would still be room to cut the rate again before the bond-buying programme is restarted.

The global slowdown in manufacturing has affected growth in the euro area, particularly Germany.

At the same time, several countries and sectors that are less reliant on global manufacturing have

continued to develop well. Growth in France and Spain is expected to remain good in the forecast

period. Even the Italian economy is likely to grow, which hasn’t always been the case in recent

decades. The development in Germany is more troublesome, however, and we are seeing signs that

the slowdown has spread to the services sector. Forward-looking indicators in Germany have

continued to fall and in most cases are at the same low levels as most recently seen during the

financial crisis.

Taken together, growth in the euro area is forecast at 1.1% in 2020 and 1.4% in 2021, which is

considered close to the long-term growth potential. The forecast has been revised up marginally

since August, partly because of a somewhat less dismal assumptions regarding Brexit. The decent

growth in the euro area means that the labour market is holding up fairly well, and that employment

continues to rise in most countries.


UNITED KINGDOM

Inflation pressure remains conspicuously absent, and it is hard to see underlying inflation staying

consistently at the ECB’s target. Inflation expectations are very low, and wage growth in the major

economies is constrained.

The inflation target will be hard to reach, especially since monetary policy has largely been

exhausted. The European Central Bank (ECB) recently launched another stimulus package, which

included an even lower benchmark rate and a restart to the bond-buying programme in November.

These measures, however, aren’t expected to have much impact, especially against the backdrop of

today’s very low interest rates. Additional stimulus could also be hard to achieve since several

members of the ECB’s Executive Board expressed scepticism about the new measures. Taken

together, we therefore expect the ECB to leave monetary policy unchanged. The bond-buying

programme means that the ECB will buy bonds with a value of EUR 20 billion starting in November

for as long as it’s needed. According to our forecast, this may have to go on for quite some time, and

perhaps be expanded, in order to get inflation close to the target. But sometime late next year, the

ceiling for allowable bond buying is expected to be hit in certain countries. It could then be hard to

convince a majority within the ECB to stretch these limits.

Fiscal policy should be more expansionary in several countries. This view is shared by the ECB, OECD,

and IMF, all of which have encouraged countries with the fiscal space to invest in measures that

would both support domestic demand and increase productivity. So far, these countries haven’t been

willing to act. We feel that, as more time passes with extremely low, and, in many cases, negative

interest rates, the politicians will eventually succumb and spend a little more. This could take time,

however, and we do not expect fiscal policy to support the economy before 2021.

More than three years after the referendum, Brexit is still surrounded by uncertainty. In the August

forecast, we expected a hard Brexit on October 31, which we thought was the most likely scenario.

Fortunately, we were wrong, and the UK did not leave the EU without an agreement. None of the

possible scenarios have been ruled out, however, and the outcome is still up in the air at the time of

writing. The EU recently announced that the UK has been given an extension; the new deadline is

January 31, 2020. A new election will be held in the UK in December 2019. The risk that the UK

leaves without an agreement is still there, and if it materialises, it would impact the entire European

economy. Even if an agreement is pushed through and we get a soft Brexit before January 31, the

uncertainty surrounding Brexit won’t disappear. The UK has a transition period to December 2020,

which means that, as soon as a divorce settlement is reached, the focus will shift to future trade

relations. There will be little time to negotiate, and these negotiations probably won’t get done until

the end of 2020. The transition period could then be extended and the can kicked down the road

again.

Since the likelihood of a hard Brexit has nevertheless dropped significantly, our main scenario is now

a soft Brexit, although the other alternatives, a hard Brexit or that the UK eventually changes its

mind and withdraws its exit request, remain. This means that the economy will develop a little less

negatively than we had assumed in August. Taken together, we therefore revise the outlook slightly

up for the UK.


SWEDEN

Data on the Swedish economy are mixed. The revised national accounts indicate stagnating

production in the first half of the year, and more forward-looking economic indicators have trended

lower for nearly two years.

Most labour market indicators have gradually declined during the year. However, Statistics Sweden

has recently admitted to quality flaws in its Labour Force Survey, which measures employment and

unemployment, and indicated that the weaker data this summer were almost certainly inaccurate. At

the same time, the data probably left too positive a picture of the labour market at the beginning of

the year, according to Statistics Sweden. Revised data are expected later this year.

The monthly data on retail sales, household consumption, and business sector production have been

decent this year. Exports and imports have continued to rise. After a lengthy period when nothing

much happened, the housing market has sprung back to life and prices are now rising again.

The above data provide a somewhat incomplete picture of current conditions, which makes the

forecast more uncertain than normal. In all, our view of the economy hasn’t changed much from

August. We expect lower growth going forward, but with activity levels staying high and the labour

market weakening only slightly. Our view, therefore, is that Sweden won’t fall into a recession,

although this obviously can’t be ruled out. Continued low interest rates will benefit indebted

households. House prices are expected to increase by 5% per year in 2020 and 2021.

The somewhat softer labour market and slowdown in manufacturing are likely to keep wage

increases in check in coming years. This is also partly why underlying inflation pressure in Sweden

will remain low. Inflation is still expected to stay fairly close to the target in the coming year. The

krona should remain weak, which will gradually contribute to rising import prices.

The Riksbank recently signalled that the low rates are here to stay. While it was clear in stating that a

hike is likely as soon as in December, even though the economy is weakening and several other

central banks are going in the opposite direction, it also signalled that the repo rate will then hold

steady for several years. Our forecast means that the Riksbank will raise the repo rate to 0.00% in

December and then keep it there for the entire forecast period.

We see the risk in this forecast as mostly on the up- rather than the downside, i.e., that it is more

likely that there will be another rate hike than a cut. The effect of negative benchmark rates has been

called into question more often lately, especially internationally. We think the Riksbank partly shares

this view and therefore has a high threshold for again cutting rates to negative territory.

As the monetary policy weapon against an economic slowdown has more or less been depleted,

there are more calls for fiscal policy This is a situation that Sweden shares with most other countries,

and there is growing support internationally for fiscal policy to take a bigger role in stabilisation

policy. Fortunately, Sweden has the flexibility for fiscal action, so, if the economy were to face a

bigger downturn than in our forecast, we would expect the politicians to reluctantly loosen the


SWEDEN

government’s purse strings. Given the weak parliament, however, there is a big risk that it could be

hard to reach a consensus on measures, which therefore could be delayed for a while.

We would like to see a more expansionary fiscal policy right now, even if the economic slowdown is

mild. A risk/reward assessment of fiscal policy clearly suggests more stimulus. The risk associated

with a more expansionary fiscal policy is still very limited, since Sweden’s national debt is historically

and internationally very low. Limited government borrowing should lead to marginally higher

interest rates, and, for several maturities, government bonds are likely to continue to trade with

negative yields.

On the other hand, there is an obvious risk that a lack of stimulus can reinforce the economic

downturn. Municipalities will face tight economic constraints going forward, mainly because of the

big jump in the number of young and old people. It would be unfortunate if they tackled the

slowdown by reducing the number of employees, which could exacerbate the situation. The

government shouldn’t wait beyond the spring budget to allocate additional funds to the municipal

sector. It should also signal that more funds will be available later, so that the municipalities can plan

accordingly.

The biggest risk with an overly strict fiscal policy won’t be seen for a few years, however, when

insufficient investment in the climate, education, integration, and infrastructure will become more

evident. This would harm the long-run growth potential of the economy, thereby hurting future

generations the most.

GDP growth: 2.0% Inflation: 2.4%

Unemployment: 6.6%


Unemployment: 3.6%

GDP growth: 1.2%

Inflation: 1.9%

Unemployment: 7.7%

GDP growth: 2.0%

Inflation: 2.5%

Unemployment: 6.2%


Unemployment: 6.5%


Unemployment: 5.1%


NORDICS AND BALTICS

The Nordic economies have so far withstood the slowdown in global manufacturing. The labour

market has held up well. In Finland, the employment rate has reached record levels, although there

are signs that unemployment has bottomed out.

Leading indicators suggest, however, that tough times lie ahead in all the Nordic economies. Our

forecast calls for growth of about 1% in both Denmark and Finland next year. While this may seem

low, it is close to their long-term growth capacity.

The Norwegian economy is also expected to slow down. Despite four rate hikes by Norges Bank in

the last year, the krone has greatly underperformed. The weak exchange rate is not expected to

support the economy much, since Norwegian exports are less price sensitive and more dependent on

demand from abroad. We expect a slight appreciation of the krone going forward, but the low level

will largely persist. Norges Bank is expected to keep rates unchanged for the entire forecast period,

but its tolerance for a further depreciation of the krone is limited.

Also, the Baltic economies are feeling the chill from the global downturn. Besides a more muted

export growth, both household consumption and investments are expected to grow more slowly in

the years to come. For all countries, annual GDP growth is expected to decline to 2.0-2.5% during

2020 and 2021, which is markedly below the pace in recent years.

Employment is stabilising in Estonia and Lithuania, while declining in Latvia. Unemployment is

expected to rise somewhat. Although the nominal wage growth is expected to be lower in all

countries, it will nevertheless still be around 5-7% per year in 2020 and 2021. Inflation is expected to

stay around 2.0-2.5% in all countries.


IN-DEPTH

China and India together account for around 35% of global carbon dioxide emissions, which makes

them key players in the fight against climate change. China’s coal driven growth model has had a

high price in terms of carbon emissions and environmental damage. India remains in an earlier

development phase and needs to catch up in terms of infrastructure and industrialisation to reach a

similar level of living standard. India cannot copy China’s growth model, if catastrophic climate

change is to be avoided.

China and India already have relatively ambitious national climate goals, which will imply large

investments in renewable energy, energy efficiency and related green technologies. The climate

policy goals will most likely be made more ambitious if the Paris Agreement targets are to be

reached. Domestic environmental concerns also motivate high level of ambition. At the same time,

urbanisation continues in China and India, and, by 2050, 20% of the world population is estimated to

live in cities in these two countries. These cities will require continued investment and

modernisation, but they must also be built and planned for minimal environmental impact.

2 For more details read our Macro focus (in Swedish only) Klimatet och kapitalet: Kina, Indien och gröna exportmöjligheter.

https://internetbank.swedbank.se/ConditionsEarchive/download?bankid=1111&id=WEBDOC-PRODE43061872


IN-DEPTH

Managing the sustainable transformation and urbanisation in China and India implies a big challenge.

There are reasons to be hopeful, however: China has been a leader in green investment, while India

also plans to increase its use of renewable energy considerably. There are also historical examples,

such as the UK, that show that it is possible to phase out coal power relatively quickly with the right

incentives. The drastic fall in the price of renewables over the last decade also makes the shift easier.

The sustainability shift in China and India is also an important opportunity for companies that can

respond to China’s and India’s needs, which could lead to export gains in the Nordics and the Baltics.

For example, Sweden could, according to our estimates, boost its export to China and India by around

180 billion SEK in 2019-2030. This is conditional on Sweden’s share of China’s and India’s goods

imports rising by 10% as a result of increased clean tech exports. By developing green technology,

the industries in our home markets can both reduce the global carbon emissions and remain

competitive. Ambitious climate goals and sufficiently high carbon price will be key in supporting this

development.


APPENDIX


APPENDIX


APPENDIX

This report has been compiled by analyst(s) at Swedbank Macro Research, a

unit within Swedbank Research that belongs to Swedbank Large Corporates &

Institutions (“LC&I”). Macro Research are responsible for preparing reports on

economic developments in the global and domestic markets. Macro Research

consists of research departments in Sweden, Norway, Finland, Estonia, Latvia,

and Lithuania.

Swedbank Macro Research bases the research on a variety of aspects and

analysis. For example: A fundamental assessment of the cyclical and structural

economic, current or expected market sentiment, expected or actual changes in

credit rating, and internal or external circumstances affecting the pricing of

selected FX and fixed income instruments. Based on the type of investment

recommendation, the time horizon can range from short-term up to 12 months.

Recommendations in FX and fixed income instruments are done both in the

cash market and in derivatives. Recommendations can be expressed in absolute

terms, for example attractive price, yield or volatility levels. They can also be

expressed in relative terms, for example long positions versus short positions.

Regarding the cash market, our recommendations include an entry level and

our recommendation updates include profit and often, but not necessarily, exit

levels. Regarding recommendations in derivative instruments, our

recommendation include suggested entry cost, strike level and maturity. In FX,

we will only use options as directional bets and volatility bets with the

restriction that we will not sell options on a net basis, i.e. we will only

recommend positions that have a fixed maximum loss.

The analyst(s) responsible for the content of this report hereby confirm that

notwithstanding the existence of any such potential conflicts of interest

referred to herein, the views expressed in this report accurately reflect their

personal views about the securities covered. The analyst(s) further confirm not

to have been, nor are or will be, receiving direct or indirect compensation in

exchange for expressing any of the views or the specific recommendation

contained in the report.

This report by Macro Research is issued by the business area LC&I within

Swedbank AB (publ) (“Swedbank”). Swedbank is under the supervision of the

Swedish Financial Supervisory Authority (Finansinspektionen). In no instance is

this report altered by the distributor before distribution.

In Finland this report is distributed by Swedbank’s branch in Helsinki, which is

under the supervision of the Finnish Financial Supervisory Authority

(Finanssivalvonta).

In Norway this report is distributed by Swedbank’s branch in Oslo, which is

under the supervision of the Financial Supervisory Authority of Norway

(Finanstilsynet).

In Estonia this report is distributed by Swedbank AS, which is under the

supervision of the Estonian Financial Supervisory Authority

(Finantsinspektsioon).

In Lithuania this report is distributed by “Swedbank” AB, which is under the

supervision of the Central Bank of the Republic of Lithuania (Lietuvos bankas).

In Latvia this report is distributed by Swedbank AS, which is under the

supervision of The Financial and Capital Market Commission (Finanšu un

kapitala tirgus komisija).

This document is being distributed in the United States by Swedbank and in

certain instances by Swedbank Securities U.S. LLC (“Swedbank LLC”), a U.S

registered broker dealer, only to major U.S. institutional investors, as defined

under Rule 15a-6 promulgated under the US Securities Exchange Act of 1934,

as amended, and as interpreted by the staff of the US Securities and Exchange

Commission. This investment research is not intended for use by any person or

entity that is not a major U.S institutional investor. If you have received a copy

of this research and are not a major U.S institutional investor, you are

instructed not to read, rely on or reproduce the contents hereof, and to destroy

this research or return it to Swedbank or to Swedbank LLC. Analyst(s)

preparing this report are employees of Swedbank who are resident outside the

United States and are not associated persons or employees of any US

registered broker-dealer. Therefore, the analyst(s) are not subject to Rule 2711

of the Financial Industry Regulatory Authority (FINRA) or to Regulation AC

adopted by the U.S Securities and Exchange Commission (SEC) which among

other things, restrict communications with a subject company, public

appearances and personal trading in securities by a research analyst.

Any major U.S Institutional investor receiving the report, who wishes to obtain

further information or wishing to effect transactions in any securities referred

to herein, should do so by contacting a representative of Swedbank LLC.

Swedbank LLC is a U.S. broker-dealer registered with the Securities and

Exchange Commission and a member of Financial Industry Regulatory

Authority and the Securities Investor Protection Corporation. Its address is One

Penn Plaza, 15th Fl., New York, NY 10119 and its telephone number is 212-

906-0820. For important U.S. disclaimer, please see reference:

http://www.swedbanksecuritiesus.com/disclaimer/index.htm

In the United Kingdom this communication is for distribution only to and

directed only at "relevant persons". This communication must not be acted on –

or relied on – by persons who are not "relevant persons". Any investment or

investment activity to which this document relates is available only to

"relevant persons" and will be engaged in only with "relevant persons". By

"relevant persons" we mean persons who:

Have professional experience in matters relating to investments falling

within Article 19(5) of the Financial Promotions Order.

Are persons falling within Article 49(2)(a) to (d) of the Financial Promotion

Order ("high net worth companies, unincorporated associations etc").

Are persons to whom an invitation or inducement to engage in

investment activity (within the meaning of section 21 of the Financial

Services and Markets Act 2000) – in connection with the issue or sale of

any securities – may otherwise lawfully be communicated or caused to be

communicated.

All information, including statements of fact, contained in this research report

has been obtained and compiled in good faith from sources believed to be

reliable. However, no representation or warranty, express or implied, is made

by Swedbank with respect to the completeness or accuracy of its contents, and

it is not to be relied upon as authoritative and should not be taken in

substitution for the exercise of reasoned, independent judgment by you.

Be aware that investments in capital markets – such as those described in this

document – carry economic risks and that statements regarding future

assessments comprise an element of uncertainty. You are responsible for such

risks alone and we recommend that you supplement your Decision-making

with that material which is assessed to be necessary, including (but not limited

to) knowledge of the financial instruments in question and the prevailing

requirements as regards trading in financial instruments.

Opinions contained in the report represent the analyst's present opinion only

and may be subject to change. In the event that the analyst's opinion should

change or a new analyst with a different opinion becomes responsible for our

coverage, we shall endeavour (but do not undertake) to disseminate any such

change, within the constraints of any regulations, applicable laws, internal

procedures within Swedbank, or other circumstances.

If you are in doubt as to the meaning of the recommendation structure used by

Swedbank in its research, please refer to “Recommendation structure”.

Swedbank is not advising nor soliciting any action based upon this report. If

you are not a client of ours, you are not entitled to this research report. This

report is not, and should not be construed as, an offer to sell or as a solicitation

of an offer to buy any securities.

To the extent permitted by applicable law, no liability whatsoever is accepted

by Swedbank for any direct or consequential loss arising from the use of this

report.

In Swedbank Macro Research, a unit within Swedbank Research, internal

guidelines are implemented in order to ensure the integrity and independence

of the research analysts. For example:

Research reports are independent and based solely on publicly available

information.

The analysts are not permitted, in general, to have any holdings or any

positions (long or short, direct or via derivatives) in such Financial

Instruments that they recommend in their investment analysis.

The remuneration of staff within the Swedbank Macro Research

department may include discretionary awards based on the firm’s total

earnings, including investment banking income. However, no such staff

shall receive remuneration based upon specific investment banking

transactions upon specific investment banking transactions.

An investment recommendation is normally updated twice a month. This

material may not be reproduced without permission from Swedbank Research,

a unit within LC&I. This report is not intended for physical or legal persons who

are citizens of, or have domicile in, a country in which dissemination is not

permitted according to applicable legislation or other Decisions.

Produced by Swedbank Research, a unit within LC&I, Stockholm.

Swedbank LC&I, Swedbank AB (publ), SE-105 34 Stockholm.

Visiting address: Malmskillnadsgatan 23, 111 57 Stockholm.

http://www.swedbanksecuritiesus.com/disclaimer/index.htm

Documents

Completed: November 7, 2019, 07:30 Distributed: November 7, … · 2019. 11. 7. · Chief Economist Latvia [email protected] +371 6744 58 44 Agnese Buceniece Senior Economist