According to the Swedish National Statistical Office, Sweden’s gross domestic product (GDP) was lower than anticipated in the fourth quarter of 2022. The decline was attributed to a sharp increase in the consumer price index (CPI), which resulted in a reduction in household spending, as well as higher borrowing costs compared to previous periods.
The data revealed that Sweden’s GDP fell by 0.9% in Q4/2022, which was higher than what was anticipated by the Statistical Office. The Swedish economy is expected to continue shrinking this year as a result of the ongoing inflation issue.
In an effort to combat rising inflation, the Swedish central bank has raised interest rates, which has impacted households with debt, particularly those with mortgages. Mortgage interest rates are expected to remain steady for a short period, and the immediate impact has been a decrease in housing prices, while consumers have reduced their spending.
The European Commission (EC) has predicted that Sweden may be the only European Union (EU) member state to experience a full-year contraction in 2023. This is due to households still being under financial pressure and the decline in investment in new housing.
In conclusion, Sweden’s economy has experienced a larger decline than expected in the fourth quarter of 2022 due to a surge in inflation, which has led to reduced household spending and higher borrowing costs. The Swedish central bank’s move to raise interest rates has affected households with debt and is expected to result in a decrease in housing prices, as well as a continued decline in consumer spending.