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Sweden Economic Forecast

Sweden Economic Outlook

As our analysts had anticipated, GDP plunged 1.5% quarter on quarter in Q2—the steepest decline in three years. Q2’s deterioration was partly due to an unfavorable base effect. While detailed national accounts data has not yet been published, the downturn was likely broad-based. Domestic spending was likely restrained by a higher unemployment rate in Q2 and softer year-on-year nominal wage growth in April–May. Moreover, inflation remained markedly above target in Q2, which the Riksbank met with aggressive monetary policy tightening in April and June. Additionally, industrial output declined at a steeper month-on-month pace on average in Q2, and conditions in both the manufacturing and services sectors deteriorated at steeper rates in Q2. GDP is expected to post a marginal quarterly decline in Q3, dragging Sweden into a technical recession.

Sweden Inflation

Consumer price inflation with a fixed interest rate (CPIF) was steady at June’s 6.4% in July, while core inflation ticked down to 8.0%. In the remainder of H2, CPIF is expected to ease from its current level and average below H1’s level, thanks to higher interest rates. Still, it will remain markedly above the Riksbank’s 2.0% target.

This chart displays Economic Growth (GDP, annual variation in %) for Sweden from 2013 to 2022.

Sweden Economic Data

2018 2019 2020 2021 2022
Population (million) 10.2 10.3 10.4 10.5 10.5
GDP (USD bn) 555 534 547 639 591
GDP per capita (USD) 54,257 51,697 52,741 61,154 56,158
GDP (EUR bn) 470 477 480 541 562
GDP per capita (EUR) 45,986 46,187 46,264 51,732 53,427
GDP (SEK bn) 4,828 5,050 5,039 5,487 5,979
Economic Growth (Nominal GDP, ann. var. %) 4.4 4.6 -0.2 8.9 9.0
Economic Growth (GDP, ann. var. %) 2.0 2.0 -2.3 5.9 2.9
Domestic Demand (ann. var. %) 1.7 0.2 -2.3 6.1 3.6
Private Consumption (ann. var. %) 1.8 0.7 -3.2 6.3 1.9
Government Consumption (ann. var. %) 1.0 0.3 -2.0 2.9 0.1
Fixed Investment (ann. var. %) 1.4 -0.3 1.6 6.8 6.2
Exports (G&S, ann. var. %) 4.4 6.1 -5.9 10.8 7.1
Imports (G&S, ann. var. %) 4.0 2.2 -6.3 11.3 9.4
Industrial Production (ann. var. %) 2.6 2.4 -4.9 7.0 2.1
Retail Sales (ann. var. %) 1.5 2.5 2.0 6.1 -2.3
Home Prices Index (ann. var. %) 0.3 2.2 6.8 16.6 4.9
Disposable Income (ann. var. %) 2.2 2.4 -0.5 4.0 0.0
Wages (ann. var. %) 2.6 2.6 2.1 2.6 2.7
Unemployment (% of active population, aop) 6.5 7.0 8.5 8.8 7.5
Fiscal Balance (% of GDP) 0.8 0.6 -2.8 0.0 0.7
Public Debt (% of GDP) 39.5 35.5 39.8 36.5 33.0
Money (ann. var. of M2 %) 6.7 7.1 18.4 10.9 2.9
Inflation (CPI, ann. var. %, eop) 2.0 1.8 0.5 3.9 12.3
Inflation (CPI, ann. var. %, aop) 2.0 1.8 0.5 2.2 8.4
Inflation (CPIF, ann. var. %) 2.2 1.7 0.5 4.1 10.2
Inflation (CPIF, ann. var. %, aop) 2.1 1.7 0.5 2.4 7.7
Inflation (PPI, ann. var. %, aop) 6.6 3.0 -3.4 10.7 21.4
Riksbank's Policy Rate (%, eop) -0.50 -0.25 0.00 0.00 2.50
3-Month STIBOR (%, eop) -0.13 0.15 -0.05 -0.05 2.70
10-Year Bond Yield (%, eop) 0.45 0.14 0.03 0.29 2.37
Stock Market (ann. var. of OMXS30 %) -10.7 25.8 5.8 29.1 -15.6
Exchange Rate (SEK per USD, eop) 8.87 9.36 8.21 9.05 10.42
Exchange Rate (SEK per USD, aop) 8.70 9.46 9.20 8.58 10.12
Exchange Rate (SEK per EUR, eop) 10.13 10.51 10.05 10.30 11.12
Exchange Rate (SEK per EUR, aop) 10.26 10.59 10.49 10.15 10.64
Current Account Balance (EUR bn) 11.7 25.5 28.3 36.7 27.1
Current Account Balance (% of GDP) 2.5 5.3 5.9 6.8 4.8
Merchandise Trade Balance (EUR bn) 9.4 18.5 19.0 22.9 19.7
Foreign Direct Investment (EUR bn) 4.5 7.8 18.9 17.9 43.7

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