Swedish economy shrank in 2023: official data

STOCKHOLM

Sweden's economy shrank by 0.3 percent in 2023 but technically emerged from recession in the last three months of the year, official statistics showed yesterday.

One of the weakest performers in the European Union, the Scandinavian had entered recession in the third quarter but it grew 0.1 percent between October and December.

But a "strengthening" of net exports helped to offset weaknesses elsewhere in the economy in the fourth quarter, said Mattias Kain Wyatt, economist at Statistics Sweden.

The country has been struggling with stubbornly high inflation for more than a year as well as a depreciating krona - prompting the central bank to successively raise its key rate to four percent, its highest level in 15 years.

"The Swedish economy continues to move sideways," Swedbank said in an economist note, adding that the annual GDP figure was in line with expectations.

"The monthly data shows that domestic economic activity continued to slow somewhat during the fourth quarter, with weak retail sales numbers in both November (revised up to negative 0.2 percent) and December (negative 0.2 percent)," it said.

Consumers have been hit hard by the higher prices and interest rates, with many households having mortgages with variable interest rates.

For 2024, the central bank expects the rate of inflation to slow to 4.4 percent and the economy to shrink again by 0.2 percent.