NewsRescue
Sweden is heading for a mild recession as GDP fell 0.8% in the second quarter compared to the first three months of the year, according to Statistics Sweden on Tuesday.
Data suggest that the economic slump in the Nordic region’s largest economy is connected to lower goods exports and a fall in inventories, which weighed on GDP estimates.
Despite the fact that the drop was smaller than the 1.3% projected, “the Swedish export motor is in trouble,” according to Michael Grahn, chief economist at Danske Bank.
Since last year, the Swedish economy has been battered by stubbornly high inflation, prompting the country’s central bank to raise interest rates in response. The rising cost of products and loans has led people to make cuts.
“The second quarter of 2023 was generally weak with declines in several of the main components of GDP,” said Jessica Engdahl, head of the section at Statistics Sweden’s National Accounts Department.
“Household consumption expenditure was negative for the fourth consecutive quarter,” she continued.
According to Sweden’s largest bank, SEB, household spending will be a determining factor in how deep the contraction turns out to be.
So far, household consumption has fallen by 0.2%, owing primarily to lower spending on housing, recreation, and culture, while real disposable income has fallen by 3% compared to the second quarter of 2022.
“Sweden will continue to look more anemic than many other countries,” SEB predicted.
Meanwhile, Handelsbanken experts predict the Nordic country is “heading for a mild recession,” with GDP expected to fall further in the second half of 2023.
