A shallow recession in Sweden is looming

Upward revisions to recent quarters have pushed up our Sweden growth forecast for 2022 to 3%. That said, we expect the economy to stall in Q3 and contract by around 0.5% from peak to trough by Q1 2023. Inflation continues to rise, the housing market is undergoing a major correction, consumer confidence is at record lows, and business surveys point to weakening momentum. We expect growth of just 0.9% in 2023, down from 1.4% last month.

What you will learn:

• Revised data show the economy grew 0.2% q/q in Q1 and 0.9% in Q2.
• This has pushed up growth in 2022, despite a downgraded H2 outlook. Based on monthly data, the economy stalled in July, with consumer spending down 1.5% m/m.
• On the production side, a large one-off rise in manufacturing offset a 1.3% drop in construction and no growth in services.