People in Sweden are feeling the effects of high inflation and tumbling house prices.
JONATHAN NACKSTRAND / Contributor / Getty Images
The Swedish government is now predicting a deeper than expected GDP contraction in 2023, according to data released Monday, worsening an already gloomy outlook for the country’s economy.
Sweden’s Ministry of Finance estimated in December that GDP would shrink by 0.7%, but it now predicts a 1% downturn as it reassesses the “challenging economic environment.”
“We face major challenges, but we will get through them together,” Sweden’s Minister for Finance, Elisabeth Svantesson, said in a press release Monday.
“Many people are struggling to make ends meet, so it is important for the Government to fight inflation and support those in the most difficult circumstances.”
Sweden’s government had already described the country’s economic outlook for 2023 as “gloomy” in a report in October 2022, with the expectation that the economy would slip into recession. The latest CPI data shows inflation is finally starting to slow, but wages are limping behind and house prices are facing a serious downturn.
The European Commission, the EU’s executive arm, echoed the downbeat tone in its latest growth outlook, in which Sweden is the only country where GDP growth is projected to slide into negative territory this year.
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