Swedish Ministry of Finance Revises Economic Growth Forecast Downward

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Swedish Ministry of Finance Revises Economic Growth Forecast Downward

Investing.com -- The Swedish Ministry of Finance has revised the country's economic growth forecast up to 2026, reflecting the prolonged weakness in the Scandinavian nation's economy and increasing global uncertainty. The ministry anticipates that gross domestic product (GDP) will expand by 2.2% next year on a calendar-adjusted basis, a decrease from the previous forecast of 2.8% made in September. According to a statement published on the ministry's website on Wednesday, despite this revision, the ministry still expects an acceleration in economic growth by 2026, projecting an expansion of 2.7%, though this is also lower than the earlier projection of 2.9%.

This revision came after mixed data regarding the outlook for Sweden's export-driven economy, which has been hovering near stagnation for nearly three years. The GDP result for October showed an unexpected contraction, contrary to the unexpected expansion seen in the third quarter.

Finance Minister Elisabeth Svantesson stated that Sweden is in a continued economic decline but stressed the country's strong financial position and promising recovery potential for 2025 and 2026. However, she noted that economic trends remain uncertain due to increasing geopolitical and geo-economic risks in the autumn. She also expressed that Swedish exports could be weaker than expected if demand from Sweden's main trading partners falls short.

The ministry's statement further indicated that the anticipated economic recovery will be largely supported by improving household consumption due to declining credit costs and increasing purchasing power. However, it was also noted that time is needed for improvements in residential construction. Part of the downward revision can be attributed to higher production observed this year; the calendar-adjusted growth forecast was slightly upgraded from 0.6% to 0.9%.

The Ministry of Finance's estimates contradict those of the Riksbank, which published growth projections of 2.1% for 2025 and 2.3% for 2026 in September. The central bank is expected to announce new forecasts and a decision on interest rates on Thursday.