After several turbulent years, much is now falling into place, inflation is normalizing and central banks are lowering interest rates. The pressure on households and companies is easing, even if the geopolitical risks remain.
The Swedish economy has stagnated for the past two years, but the slowdown has taken place from a strong starting point and resource utilization is thus only slightly weaker than normal.
– The export sector has performed strongly, while central parts of the domestic economy have developed weakly. Many companies and households are now in need of lower interest rates to prevent the slowdown from deepening with more bankruptcies and rising unemployment as a result, says Annika Winsth.
A weak krona is often cited as a reason why the Riksbank is holding off on lowering the interest rate. Nordea believes that today’s level is not an obstacle. The krona argument does not carry as much weight when inflation falls below the 2 percent target.
– There are no domestic reasons for the Riksbank not to lower the interest rate. The economy is weak, the labor market is deteriorating and inflation is expected to be below the target for the foreseeable future. Now it is up to the Riksbank to prove that it can act more independently based on Swedish conditions, says Annika Winsth.
Population growth is the lowest in 20 years and is expected to continue to develop weakly. It will have consequences for the construction industry as well as for municipalities and regions, and thus growth will be dampened in both the short and long term.
The geopolitical situation has worsened, where a higher oil price and generally subdued risk appetite can affect the economic situation.
– It is wise to be humble in the face of increased global tensions, but if the situation does not worsen, there are good conditions for lower interest rates and recovery. Global demand seems to have bottomed out, which is important for the Swedish economy and our export companies, says Annika Winsth.
| Sweden, key figures | 2022 | 2023 | 2024P | 2025P |
|---|---|---|---|---|
| GDP, % | 2.7 | -0.2 | 0.4 | 1.9 |
| GDP, calendar adjusted, % | 2.7 | 0.0 | 0.4 | 2.1 |
| Unemployment rate (AKU), % | 7.5 | 7.7 | 8.4 | 8.2 |
| Inflation, CPIF, annual average, % | 7.7 | 6.0 | 1.9 | 1.7 |
| Wages (KL), % | 2.8 | 3.8 | 3.8 | 3.5 |
Read the full report here.
For further information:
Annika Winsth, chief economist, 070 612 59 59
Hugo Laigar, press communicator, 073 574 58 08
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