On an annual basis, Sweden’s GDP shrank for the fourth quarter by 0.9 percent and several banks predicted a recession in 2023.
STOCKHOLM, Feb. 28 (Xinhua) — Sweden’s gross domestic product (GDP) decreased by 0.9 percent in the fourth quarter of 2022 compared to the third quarter, according to figures released on Tuesday by Statistics Norway.
Compared to the previous year, GDP also decreased during the fourth quarter by 0.9 percent. “GDP decreased in the fourth quarter with a broad decline in capital formation and household consumption,” says Jessica Engdahl, head of section at the National Accounts Department, Statistics Sweden, in a press release.
Compared to the previous quarter, gross fixed capital formation in the fourth quarter decreased by 0.8 percent, exports decreased by 1.0 percent, imports by 1.1 percent, and market production decreased by 1.3 percent.
Although GDP for the full year 2022 increased by 2.4 percent from the previous year, several major banks have given negative forecasts for Sweden’s GDP this year: Swedbank expected a decline of 1.3 percent, SEB expected it to shrink by 1.2 percent and Nordea, more pessimistic, predicts a 2 percent decline.
The slowdown in economic activity took a toll on households. Households’ final consumption decreased by 0.2 percent in the fourth quarter compared to the previous quarter, where reduced spending on furnishings and household equipment, food and consumption abroad mainly contributed to the decline.
Households’ real disposable income decreased by 2.7 percent compared to the fourth quarter of 2021.
– Households will have a tough time, says Mattias Persson, chief economist at Swedbank, to Sveriges Television. In his view, the Riksbank (Sweden’s central bank) needs to act more than previously thought because “a very weak krona” was also to blame.
Persson said that Swedish households were hit significantly harder than those in the rest of Europe and the US, partly because the krona was weakened by the inflation shock, partly because Swedes are generally more indebted and more sensitive to interest rates. interest rate increases.
“This in turn leads to the housing market in Sweden appearing as one of the hardest hit in the entire Western world right now,” says Swedbank and predicts that housing prices will continue downward.
Earlier this month, the European Commission said in its 2023 economic winter forecast that Sweden’s economy would fare worst in the EU in 2023, with an estimated decline of 0.8 percent this year.