The Swedish economy is in a bleak state and the Nordic country will enter a recession next year, according to the government's own forecast.
“The Swedish economy is heading towards a rather grim winter. We don't know how cold and grim it will be yet,” the newly appointed Finance Minister Elisabeth Svantesson of the Moderate Party said as she presented the forecast.
The government expects Sweden to enter a recession with GDP falling by 0.4 percent next year, combined with a slack economy. In its forecast, inflation for next year is forecast to rise to 5.9 percent. Unemployment is also expected to rise from the present level of 6.5 percent.
Given this, Svantesson urged a well-balanced fiscal policy to bring down inflation and handle the overall economic downturn.
“Getting rid of inflation is not the main task of fiscal policy, but it is important for us not to exacerbate the inflation that exists now,” Svantesson stressed.
Svantesson warned that many of her countrymen will continue to experience tough economic times next year. She also warned that stimulating demand is not an option in the present circumstances, as it is bound to feed inflation further.
The new Moderate-led government will present its first budget in just a week, in collaboration with the national-conservative Sweden Democrats, which despite being proclaimed the election “winners” received no ministerial posts and opted out of the government coalition, rather than providing outward support. Svantesson said the negotiations had been “constructive” in tone.
In an October survey by pollster Sifo, more than half of Swedes, 51 percent, answered that they expect the future to be bleak or very bleak. Seven out of 10 Swedes were concerned that many Swedish companies would have serious problems, and six out of 10 were worried that unemployment would increase. Two out of three were worried that their own household expenses would increase.
“We believe that there are a number of different reasons for worrying - economic, security and political,” Toivo Sjörén of Sifo told Swedish media.
The looming economic depression manifested itself in a recent report by the National Institute of Economic and Social Research, which indicated that Swedish households' expectations for the next 12 months have reached record levels of pessimism.
Right now, Sweden's economy is already under struggling as the result of backfiring EU sanctions against Russia, which despite being designed to “punish” Moscow for its special operation in Ukraine, only made Europe's energy and cost-of-living crises worse. The overall inflation rate in Sweden reached a record 9.7 percent in September, a level unseen in decades, with some staples even hitting a two-digit rise.
Swedbank, one of the nation’s largest banks, described the economic development for households as “the worst since the Nineties”, and its chief economist Mattias Persson even envisaged the risk of a “complete stop in consumption” during a “hard and cold” winter.