Sweden's GDP will shrink in 2023: leading bank

By Trend

High inflation and interest rate hikes will affect many Swedish households and slow down the country's economic growth next year, a leading bank said in a report published here on Tuesday, Trend reports citing Xinhua.

Sweden's gross domestic product (GDP) growth is expected to be minus 1.1 percent next year, said Mattias Persson, Swedbank's chief economist and global head of macro research, in an interview with Swedish Television (SVT) Tuesday.

The Swedish central bank's policy rate is expected to increase from the present 1.75 percent to 3 percent by February, according to Swedbank's latest economic outlook.

It expects inflation and unemployment rate to reach 7.4 percent and 7.6 percent respectively in 2023.

In consequence, Swedish households are expected to spend a higher proportion of their disposable income on mortgages since the 1990s, a situation which Persson said would have a wider effect on the Swedish economy.

"The labor market still shows resilience, but the situation is expected to worsen when employment-intensive industries such as retail and construction are affected," Persson told SVT.