What's the state of the Swedish economy?

The Local Sweden
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What's the state of the Swedish economy?
NIER (or KI in Swedish) head of division Erik Spector presenting the institute's latest report on the economy on August 9th. Photo: Caisa Rasmussen/TT

Sweden's National Institute of Economic Research (NIER) now believes GDP this year will fall by 0.5 percentage points more than its last forecast.


NIER (known as KI or Konjunkturinstitutet in Swedish), a public agency that operates under the Finance Ministry, has revised its predictions for the state of the Swedish economy this year and now believes GDP will fall 0.9 percent this year.

Its previous prediction was a 0.4 percent drop in GDP for 2023.

“It’s because exports have grown at a weaker pace than we thought, and households have decreased their consumption a little bit more than we thought,” the institute’s director-general, Albin Kainelainen, told TT.

Key interest rate expected to rise next month

Swedish households have in the past year struggled to cope with high inflation, rising costs of living and interest rates. The central bank, the Riksbank, is expected to again raise the key interest rate next month.

The same factors have also had a negative impact on the building of new properties, which is declining fast.


Sweden is experiencing a period of low growth but has narrowly avoided a recession after the economy grew in the first quarter of 2023.

This period of low growth has not yet impacted the labour market, although NIER expects the unemployment rate will increase to 8.4 percent next year, up from 7.7 percent in 2023.

Not all bad news

There’s light on the horizon, however. KI expects that inflation will continue to fall over the coming months, dropping under the Riksbank's 2 percent goal at the end of 2024.

It predicts that the Riksbank will start lowering the key interest rate around summer next year, with the economy expected to grow 1.2 percent in 2024.


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