Investing.com -- The Swedish Finance Ministry has adjusted its forecast for the country's economic growth through 2026, reflecting a prolonged weakness in the Nordic nation's economy and heightened global uncertainty.
The ministry anticipates that the gross domestic product (GDP) will expand by 2.2% next year on a calendar-adjusted basis, a decrease from the previous prediction of 2.8% made in September. The statement was published on the ministry's website on Wednesday. Despite this revision, the ministry still expects an acceleration in economic growth by 2026, with a projected expansion of 2.7%, albeit lower than the earlier forecast of 2.9%.
This revision follows a series of mixed data regarding the outlook for Sweden's export-led economy, which has experienced near stagnation for approximately three years. The October GDP result showed an unexpected contraction, a stark contrast to the unexpected expansion seen in the third quarter.
Finance Minister Elisabeth Svantesson, in the statement, described Sweden as being in a continued economic downturn, but highlighted the country's strong financial standing and promising recovery potential for 2025 and 2026. She noted, however, that the economic trajectory is uncertain due to increased geopolitical and geoeconomic risks during the fall. She further stated that Swedish exports could be weaker than anticipated if demand from Sweden's key trading partners falls short of expectations.
The ministry's statement also outlined that the projected economic rebound would be largely driven by improved household consumption, aided by reduced credit costs and increased purchasing power. However, it also noted that it would take time for housing construction to see improvement. Part of the downward revision can be attributed to higher output observed this year, with the forecast for calendar-adjusted growth slightly increased to 0.9% from 0.6%.
The Finance Ministry's forecast contrasts with the Riksbank's projections of 2.1% growth in 2025 and 2.3% growth in 2026, published in September. The central bank is set to release new estimates and announce a decision on interest rates on Thursday.
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