all - time lows. the other four are spain 1977, norway 1987, finland 1991 and japan 1992. carmen m. reinhart, and kenneth s. rogoff, “ is the 2007 u. s. subprime crisis so different? an international historical comparison ”. american economic review vol. 98 no. 2 : 339 - 344. ( 2008 ). carmen m. reinhart, and kenneth s. rogoff. “ the aftermath of financial crises. ” essay prepared for presentation at the american economic association in san francisco, 3 january 2009. several companies state in the riksbank ’ s company survey, which was carried out in december and january, that they have not experienced such a sudden slowdown in the economy as during the final months of 2008. the companies also say that they have found it increasingly difficult to finance their operations. but no clear credit crunch is yet visible in the official financial market statistics. lending to companies increased by 0. 3 per cent in january compared with the previous month and by 10. 6 per cent compared with the same month last year. our most recent forecast is that gdp will fall by 1. 4 per cent this year. towards the end of the year gdp is expected to begin to rise again. but as with international economic activity, there is a substantial risk that swedish developments will also be poorer than in our main scenario. the gdp forecast for this year has been revised down substantially since last autumn. in september 2008 the riksbank forecast growth this year of 0. 9 per cent. it is very rare that forecasts are changed so much in such a short time. the revision is way outside the 95 per cent confidence interval that usually applies to our forecasts. it is also the reason why monetary policy has changed so radically since last autumn. the weakened economic activity is now also having an increasingly clear effect on the labour market. employment has begun to fall and unemployment has begun to increase. labour market indicators such as redundancy notices and the number of job vacancies are pointing to a continued rapid decline in the labour market. in the february report our forecast is for employment to decline by almost 200, 000 persons at the end of 2010, from the top level in 2008, and for unemployment to rise to around 9 per cent in 2010. however, our most recent forecast is that the current economic downturn will not be as severe as that during the crisis in the 1990s. on the other hand, we are assuming that

f. one may ask why cpif should be focused on and not cpi. in a situation in which extensive repo rate changes have very large direct effects on cpi, i consider it to be more appropriate to focus on stabilising cpif around the inflation target, instead of cpi. panels b and c in figure 1 also show the mean squared gaps, which were introduced in an article in the monetary policy report in october 2009. 3 the mean squared gap for inflation measures the deviation between the inflation forecast and the inflation target or, more precisely, the mean squared gap between the inflation forecast and the inflation target during the forecast period. a lower mean squared gap for inflation entails a forecast of inflation closer to the inflation target, that is a better stabilisation of inflation around the inflation target. the mean squared gap for resource utilisation, measured as the output gap or the hours gap, measures the deviation between the forecast for resource utilisation and normal resource utilisation – more precisely, as the average squared gap during the forecast period. a lower mean squared gap for resource utilisation thus entails a better stabilisation of resource utilisation around a normal level. figure 2 output gap for a number of forecasters per cent - 2 - 2 - 4 - 4 the riksbank, feb - 10 nier, dec - 09 european commission, nov - 09 oecd, nov - 09 imf, oct - 09 ministry of finance, jan - 10 - 6 - 8 - 10 - 6 - 8 - 10 the gaps for output and hours worked are calculated as the difference between actual and “ potential ” levels. the riksbank ’ s estimates and forecasts for potential output and hours worked are inadequate and in great need of improvement and development. 4 such development work is currently underway. these measurements of resource utilisation are thus not particularly reliable. however, according to all available measurements, there is no doubt that resource utilisation is and will remain very low during the forecast period. other forecasters ’ output gap forecasts are shown in figure 2. several of the forecasts from other forecasters indicate an even lower level of resource utilisation than the riksbank ’ s estimate. see sveriges riksbank ( 2009 ) and svensson ( 2009a ) for details. the mean squared gap for the inflation forecast is defined as 0 t, t * / t 1, where t, t denotes the forecast in quarter t for