Sweden Economic Forecast

Sweden Economic Outlook

August 27, 2019

In the second quarter, the economy unexpectedly contracted for the second time over the past year. A sizeable decline in gross fixed capital formation drove the contraction, as a dire situation in the housing market continues to exert downward pressure on investment. Real exports also declined in Q2, mostly reflecting weaker global demand. However, solid dynamics in the job market and accommodative financial conditions supported private consumption in the quarter. Looking forward, the outlook looks challenging, with the economic sentiment indicator falling to a near six-year low in July. The decline mostly reflected increased pessimism among manufacturers amid rising global trade tensions and uncertainty related to Brexit. A somber outlook for the global economy and domestic economic uncertainties led the country to sell its first-ever 10-year sovereign bonds with a negative yield on 14 August.

Sweden Economic Growth

A sluggish housing market, which is leading a downturn in residential investment and negatively affecting household’s willingness to spend, is expected to hit economic growth this year. This situation will be exacerbated by weak global growth and rising trade protectionism, which are expected to hurt Sweden’s all-important external sector. FocusEconomics panelists see GDP rising 1.6% in 2019, which is down 0.1 percentage points from last month’s forecast, and 1.5% in 2020.

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Sweden Facts

Bond Yield-0.32-4.79 %Sep 04
Exchange Rate9.73-0.20 %Sep 04
Stock Market1,5810.14 %Sep 04

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