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Huawei loses Swedish appeal over 5G ban

A Swedish court on Wednesday rejected an appeal from China's Huawei over the government's decision to ban the network equipment giant from the rollout of 5G mobile network infrastructure in the Nordic country.

A technician stands at the entrance to a Huawei 5G data center at the Guangdong Second Provincial General Hospital in Guangzhou, in southern China's Guangdong province, Sunday, Sept. 26, 2021. The hospital in southern China's Guangdong Province is using 5G and IoT technologies to collect, transmit and monitor more data in real time, allowing healthcare workers to provide better medical service for patients. (AP Photo/Ng Han Guan) XHG208
In 2020, Sweden banned network operators from using Huawei equipment in the buildup of 5G infrastructure. Photo: AP Photo/Ng Han Guan

The administrative court of appeal in Stockholm said in a statement it believed it was fair to assume that the use of Huawei’s products in central functions of the 5G network “can cause harm to Sweden’s security.”

After the UK in the summer of 2020, Sweden became the second country in Europe and the first in the EU to explicitly ban Huawei from almost all of the network infrastructure needed to run its 5G mobile network.

Beijing warned at the time that the Swedish Post and Telecom Authority’s (PTS) decision could have “consequences” for the Scandinavian country’s companies in China, prompting Swedish telecom giant and Huawei competitor Ericsson to worry about retaliatory measures.

The PTS’ decision also included a provision that equipment already installed had to be removed by January 1, 2025, which the appeals court also confirmed.

“Sweden’s security is a particularly strong interest and the Swedish Post and Telecom Authority’s decision is based on a real, current and sufficiently serious threat to Sweden’s security,” judge Anita Linder said in a statement.

Huawei first appealed the decision to a lower court which also sided with the PTS in June 2021.

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MONEY

NEW FORECAST: What’s next for the Swedish economy in 2024?

Sweden’s economic downturn will bottom out in 2024 and the key interest rate will be lowered four times this year, according to a new forecast by Sweden’s National Institute of Economic Research (NIER).

NEW FORECAST: What's next for the Swedish economy in 2024?

Sweden’s GDP will grow by 0.8 percent this year before rising to 2.5 percent next year, according to the new forecast. However, unemployment will continue to rise, hitting 8.3 percent this year, before dropping in 2025.

The institute’s core measure of inflation, CPIF, which strips out the effect of interest rate rises, fell to 2.5 percent in February. The institute expects that it will continue to drop throughout 2024, reaching 1.2 percent by the end of the year, far below the Riksbank’s 2 percent target.

“Inflation has fallen quickly and will continue to fall throughout 2024,” NIER’s head of forecasting, Ylva Hedén Westerdahl, told a press conference. “We’ve reached a stable price level and prices are going to increase at a more normal rate from now on.” 

The institute expects the Riksbank, Sweden’s central bank, to start cutting its key interest rate – currently at 4 percent – from June, with four total decreases throughout the year, reaching 3 percent by the end of 2024 and 2.25 percent by the end of 2025.

This, along with lower interest rates, increased consumption and a rise to real wages is expected to speed economic recovery.

“The biggest risk for this forecast would be if [interest rates don’t go down], and central banks are forced to make a U-turn and keep their rates high,” Hedén Westerdahl said.

GDP fell slightly in the final quarter of last year, but is expected to rise in the first quarter of 2024. Despite this, growth will not be strong enough for the economy to start to recover until the end of the year and the country will remain in a period of low growth until 2026, the institute predicts.

Consumers have also become less pessimistic about their own finances and more positive about the future, partly due to inflation nearing the Riksbank’s 2 percent target rate.

Swedish exports are expected to start to grow again in the second quarter of this year, albeit slowly, due to weak demand from abroad – the Eurozone in particular, where growth has been weak, as well as the US, where GDP growth is expected to slow throughout the year.

Joining Nato may also have an impact on Sweden’s economy, as increased defence spending means faster growth in central government consumption throughout this year and into 2025. Local governments, on the other hand, have weak finances and will need to make cutbacks in some areas, leading to comparatively weak consumption growth in both years, and a public finance deficit next year.

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