Sweden sees smaller drop in GDP this year, less growth in 2024

THE Swedish government on Friday (Jun 30) slightly raised its forecast for the Nordic country’s economy for this year while lowering growth expectations for 2024.

The government in a statement predicted GDP would decline by 0.4 per cent in 2023, up from a previous expectation of a 1.0 per cent decline, and grow by 0.8 per cent next year, down from 1.2 per cent seen previously.

It forecast headline inflation of 5.8 per cent this year and 2.4 per cent in 2024 against 5.9 per cent and 2.2 per cent, respectively, seen in April.

Finance Minister Elisabeth Svantesson told a news conference that fighting far too high inflation remained a priority, as it was a root cause for many problems in the economy.

The real estate sector is a key concern, she said.

“This is maybe one of the most worrying parts in the economy right now: that the housing market is under pressure and that housing investments are weighing on economic growth,” she said.

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Builders are facing higher input costs while housing prices drop and interest rates rise, she noted.

“Profitability is not the same today as a few years ago, and we believe this will keep weighing on the economy. So far we don’t see very high unemployment in this sector but the risk is apparent that we will do so.”

The government has said earlier that it is ready to step in to stem the fallout from a property rout if tumbling prices cause a wider crisis – a potential harbinger of trouble across Europe. REUTERS