Sweden Economic Outlook
Monthly GDP declined for a third consecutive month in December, which led the economy to slide 0.6% in sequential terms in the final quarter of 2022. Price pressures gradually intensified through December, when CPIF hit an over three-decade high. Additionally, interest rates were raised further in November, likely denting credit growth. These factors dampened private spending, which declined 0.8% in December over the month prior, as continued nominal wage growth could not shield consumers against diminished purchasing power. Another GDP decline is expected at the start of 2023, dragging the economy into a technical recession. Borrowing costs were raised further in February, albeit at a slower pace, following a mild CPIF moderation in January. Additionally, the manufacturing PMI remained in contractionary territory, and the services one softened in January.
Sweden Inflation
Consumer price inflation with a fixed interest rate (CPIF) slowed more than expected to a three-month low of 9.3% in January (December: 10.2%). Conversely, core inflation soared to 8.7%, the highest level since November 1991. Price pressures should gradually moderate further this year but will remain well above the Riksbank’s 2.0% target. Currency volatility is a risk.