Sweden has officially entered a recession in the third quarter of the year, with its economy contracting by 0.3%, according to Statistics Sweden. This marks the second consecutive quarter of contraction, with the economy shrinking by 0.8% in the second quarter. The main factors contributing to the downturn are cited as a decrease in inventories and reduced household consumption.
The decline in household consumption has been a significant contributor to the recession, shrinking by 0.6% in the third quarter. This marks the fifth consecutive quarter of reduced consumer spending. The impact of decreased industrial inventories also played a role, contributing negatively to the economy’s performance.
While household consumption has been weaker than expected, exports showed a positive trend, increasing by a solid 1.4% from the previous quarter. Net exports contributed positively to GDP, offsetting some of the domestic economic challenges.
Sweden has been grappling with stubbornly high inflation and a depreciating krona, leading the central bank to raise its key rate to four percent, the highest level in 15 years. The economic struggles have taken a toll on consumers, particularly with many households having mortgages with variable interest rates.
The government has expressed concerns about the country’s “prolonged economic winter,” with unemployment rising to 7.7% in the third quarter. The overall economic outlook remains challenging, and the government forecasts a contraction of 0.8% for the entire year of 2023. The recent data confirms a weak development in the Swedish economy, reflecting broader economic challenges faced by the country.
