Sweden’s economy shrinks as pandemic and war pinch exports

A woman strolls in the Sodermalm district of Stockholm, Sweden, October 22, 2020. Amir Nabizadeh/TT News Agency via REUTERS

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  • Q1 GDP -0.8% qtr/qtr vs pvs estimate -0.4%
  • Flat at 3.0% annual growth

STOCKHOLM (Reuters) – Sweden’s economy slowed sharply in the first quarter of this year, with the lingering effects of the pandemic and the war in Ukraine putting the brakes on growth, Statistics Sweden data show. was confirmed.

Gross domestic product (GDP) contracted by 0.8% compared to the last quarter of 2021, down from previous estimates of a 0.4% decline. That year, the economy grew by 3%, unchanged from previous estimates.

“The recession was relatively broad-based, but negative net exports were the biggest factor,” Statistics Director Jessica Engdahl said in a statement.

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According to other data, Sweden’s April trade balance was -1.8 billion crowns.

The country’s economy weathered the pandemic relatively well, but lingering bottlenecks and supply problems exacerbated by Russia’s invasion of Ukraine appear to have finally caught up with businesses.

In addition, households are feeling the pinch from sharp inflation, and mortgage costs could rise as a result of the expected series of rate hikes.

The central bank raised the base rate at the end of April and said it would need several more hikes this year and next year to keep inflation from 6.4% in April.

The market expects the Riksbank to be forced to tighten policy more aggressively than rate setters are currently planning.

Consumer confidence is at its lowest level since the 2008-2009 financial crisis, according to the latest survey, and households are already pessimistic, but retail sales remain strong. doing.

In its latest forecast, the central bank cut its growth forecast for this year to 2.8% from 3.6%, and also lowered its forecast for the next few years.

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Reported by Simon Johnson.Editing by Niklas Pollard

Our criteria: Thomson Reuters Trust Principles. Sweden’s economy shrinks as pandemic and war pinch exports

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