Published 22 December 2022 at 10.02
Economy. Next year, Sweden will enter a recession that is expected to last until 2025. This is shown by the Ministry of Finance's latest forecast for the economic situation, which Finance Minister Elisabeth Svantesson (M) presented at a press conference today.
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– The growth this year is being revised up slightly, among other things as a result of continued high willingness to invest among companies. But it is clear that a clearly worse economic situation is at the door and it will be tough for many households, says Elisabeth Svantesson.
She continues:
– The recession is expected to be somewhat more protracted compared to the forecast in the budget bill and looks like it will only reach the bottom in 2024. Even though many households are already under extreme pressure from the economic situation, it takes time for the cost increases to have a greater effect on consumption.
The high inflation and rapidly rising interest rates are expected to cause activity in the economy to fall next year. The Swedish economy is also largely affected by demand in the outside world, which is also expected to develop weakly.
GDP is estimated to decrease by 0.7 percent in 2023, which is a downward revision compared to the previous forecast. Inflation is estimated to be high for the remainder of the year and the beginning of 2023, then to decline during the course of the year. Inflation measured by the consumer price index with a fixed interest rate (KPIF) is estimated to amount to 6 percent on average in 2023.
The fact that the economic downturn is shifted forward in time leads to a clearly worse outlook for 2024 compared to the previous forecast. GDP growth in 2024 is revised down and is estimated to amount to 1 percent. Unemployment is estimated to increase in both 2023 and 2024 and then fall back as demand rises.
The forecast is surrounded by several uncertainties, above all linked to the energy situation in Europe, Russia's war in Ukraine and the duration of high inflation.
– In this situation, it is important that the fiscal policy is well balanced. The worst thing for households and companies that are having a hard time right now would have been if inflation eased further. The government's budget for next year is slightly tightening to enable inflation control and at the same time create room for action if the downturn in the economy becomes deeper than what we see in front of us now, says Elisabeth Svantesson.