Sweden slashes 2024 growth outlook to 0.6%

Sweden has revised its growth projections for 2024 downward, anticipating a persistent economic downturn until 2025. The government now forecasts a 0.6 per cent GDP increase in 2024, a reduction from the previous estimate of 1.0 per cent. This year's economic contraction is expected to be 0.5 per cent, a slight improvement from the previously forecasted 0.8 per cent decline.

During a press conference, Svantesson, a government representative, characterised the current situation as an "economic winter," noting that despite a gradual decline in inflation, high prices persist. The economic slump is anticipated to persist into 2024 and potentially extend into 2025. However, a recovery is anticipated in 2025, with GDP projected to grow by 2.7 per cent.

The centre-right coalition government also adjusted its inflation forecasts, expecting a rate of 6.1 per cent for this year and 2.7 per cent in 2024. Although still above the central bank's 2 per cent threshold, these figures represent a decrease from the previously estimated 6.0 per cent and 2.7 per cent, respectively, reported in September. The impact of higher interest rates has led to economic challenges, causing a contraction of 0.3 per cent in the third quarter of this year.

The Riksbank, in response to economic conditions, raised its main interest rate from zero to 4 per cent over the past 18 months. However, indications suggest that the rate may have reached its peak.

(With Reuters Inputs)