STOCKHOLM (Reuters) – Sweden’s economy will remain sluggish this year despite a series of rate cuts expected by the central bank in the coming months, but will accelerate in 2025, boosted by increased household and government spending , the National Institute of Economic Studies (NIER) said on Tuesday.
Growth will only be 0.8% in 2024 before rebounding to 2.5% in 2025, the Swedish agency indicated in its new forecasts.
According to NIER, inflation has peaked and is expected to stand at 1.9% in 2024, prompting the Riksbank to begin a series of rate cuts in June.
“Lower rates and rising real wages will mean that household consumption will increase relatively quickly from the end of 2024,” he said in a statement
“At the same time, investments in, among other things, defense, mean that government consumption will increase considerably faster than normal.”
The Swedish economy contracted by 0.2% in 2023 following a series of interest rate hikes decided by the central bank to combat inflation.
The Riksbank, which will publish its monetary policy decision on Wednesday, is expected to keep its key rate unchanged at 4%, but consider a reduction in May or June.
(Reporting Simon Johnson and Louise Rasmussen, Diana Mandiá, editing by Kate Entringer)
Copyright © 2024 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
