Economy contracts at steepest pace in three years in Q2
The Swedish economy finally experienced a long-forecasted and dreaded GDP contraction in the second quarter of 2023. GDP declined 1.5% in seasonally adjusted quarter-on-quarter terms, according to preliminary figures released by Statistics Sweden. The downturn was a significant deterioration from the prior quarter’s 0.1% sequential expansion and the steepest decline in three years. Q2’s contraction was three times sharper than the fall markets had anticipated.
Meanwhile, in annual terms, GDP contracted 2.2%, contrasting the prior three month’s 0.5% year-on-year increase. Q2’s annual downturn was also the steepest since Q2 2020.
Although details of the release are still pending, the quarterly downturn was largely due to June’s weak performance, as GDP fell 1.4% month on month. Goods exports seemingly took a hit in the second quarter, hampering activity. Moreover, the Riksbank’s aggressive monetary policy tightening in May should have dented investment. Meanwhile, still-elevated price pressures continued to squeeze disposable incomes; private consumption posted a 0.1% month-on-month decline in May.
The Swedish economy is expected to decline overall this year, albeit at a much shallower pace than in the past quarter. Consequently, Q3 should see a smaller contraction, although largely on a base effect.
A more comprehensive breakdown of Q2 2023 GDP will be released on 29 August.
Sweden GDP Chart
Sweden GDP Data
|Economic Growth (GDP, ann. var. %)||2.0||2.0||-2.3||5.9||2.9|
|GDP (USD bn)||555||534||547||639||591|
|GDP (EUR bn)||470||477||480||541||562|
|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|