Research Briefing | May 16, 2022

Sweden’s growth forecast cut as headwinds to growth mount

We have lowered Sweden’s growth outlook for this year to 2.6% from 2.8% amid rising downside risks. The main headwind continues to be high inflation, which is eroding real incomes and private consumption while prompting an accelerated tightening of monetary policy. Despite little direct exposure to Russia and Ukraine, Sweden will be hit by lower growth in Europe, supply bottlenecks and high energy prices. The outlook is subject to significant uncertainty.

What you will learn:

  • The economy had a weak start to 2022 due to the Omicron Covid variant.
  • Monthly indicators point to broad-based weakness, with manufacturing as a bright spot.
  • Consumer confidence remains below the worst of the pandemic with households’ inflation expectations at their highest ever and the propensity to spend at multi-year lows.

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