Sweden: Economy disappoints and stagnates in Q3
The Swedish economy flatlined in the third quarter, after a 0.8% decline in the second quarter, according to preliminary figures released by Statistics Sweden. This development fell short of the expectations of most market analysts, who had expected a rebound in growth following Q2’s slump. Nevertheless, it meant the economy avoided entering a technical recession.
Meanwhile, in annual terms, GDP contracted 1.3% in Q3, following the previous three month’s decrease of 0.8% year on year. Q3’s downturn was the steepest since Q2 2020—the onset of the Covid-19 pandemic.
Although the details of the release are still pending, the result reflected July’s strong performance, with GDP posting a 1.3% month-on-month expansion, which offset contractions in the following two months. Private consumption rose in July and August by 0.5% month on month: Falling price pressures, coupled with stronger nominal year-on-year wage growth in July–August, seemingly boosted disposable incomes. However, the unemployment rate rose in Q3, likely capping the overall improvement. Meanwhile, the Riksbank’s tightening cycle has likely dented investment, which, paired with goods exports deteriorating further in the quarter, helps explain the overall stagnation.
Our panelists have penciled in a shallow quarter-on-quarter decline in Q4, with the Swedish economy expected to decline overall in 2023.
A more comprehensive breakdown of national accounts data for Q3 will be released on 29 November.