Stockholm (Ekonamik) – After last week’s concerns about Fed packing and US-EU trade wars, the (short) Easter week allowed us to take some distance and look at some longer-term macroeconomic and political developments.
We began by taking a deep dive into the US trade wars and their short-term effects. The data suggest a strong correlation between the steep rise in average USA tariffs and the increase in the US trade deficit, while research shows that much of the cost has likely been passed on to consumers. We also took some time to look at the Chinese GDP figures published last week and cautioned against overreacting to the surprising overperformance of the Asian giant.
The trade war and a Chinese slowdown are a perfect example of the issues that worried Paul Krugman. In a recent interview, the economics Nobel Laureate warned about a looming smörgåsbord recession, not triggered by a single shock but by a series of simultaneous economic slowdowns.
In Nordic politics, we reported on the results of the Finnish election, which saw the centrist socialists narrowly beat the far-right Finns party by 17.7% to 17.5%. The resulting parliament is expected to struggle with coalition negotiations.
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