Swedish economic downturn to deepen - think tank

The NIER expects the Riksbank to raise the policy rate once more in November to 4.25% and to keep it at that level until the until the third quarter next year, when it will start to ease rates again. Monthly data from the NIER showed that Swedish consumers turned more gloomy in September.

The economic downturn in Sweden will deepen and the economy won't improve before the second half of 2024, the National Institute of Economic Research (NIER) said on Wednesday. "High inflation and rising interest rates have eroded households' purchasing power at the same time as weak global demand hits the export industry," the government-funded think tank said in a report.

The NIER expects Swedish gross domestic product to contract by 0.4% this year and to grow by 1.1% in 2024. The Swedish economy has been hit hard by rate hikes from the central bank. The

Riksbank hiked its benchmark rate to 4% last week, a steep increase from 0% just 18 months ago.

The NIER expects CPIF, the inflation measure that the Riksbank uses for its 2% inflation target, to average 6% this year and 2.5% next year. The NIER expects the Riksbank to raise the policy rate once more in November to 4.25% and to keep it at that level until the until the third quarter next year, when it will start to ease rates again.

Monthly data from the NIER showed that Swedish consumers turned more gloomy in September. Consumer confidence dipped to 69.1 points from 70.6 points the previous month. The overall index rose marginally to 85.8 points from 85.3 points with the manufacturing sector lifting the index, the data showed.

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