Sweden Braces for 'Grim Winter': Finance Minister

On Monday, Finance Minister Elisabeth Svantesson acknowledged that Sweden's economy is heading for a "grim winter." 

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The gross domestic product (GDP) is expected to shrink by 0.4 percent next year, while inflation could be as high as 5.9 percent. The unemployment rate is also projected to increase.

"It is important that the Swedish policy is well-balanced both in relation to the need to bring down the high inflation and to be able to handle the downturn in the economy," Svantesson said.

Commenting on the projected slump in GDP, she said that Sweden is affected by the economies of its trading partners. By way of example, she mentioned Germany, which has big problems. "The high unemployment rate is problematic and as we are now facing a recession more people will be left outside" the job market, she said.

The government's outlook is broadly in line with what the National Institute of Economic Research (NIER) said in a report in September. Sweden's central bank is also expected to increase the policy rate from 1.75 percent now to 2.3 percent throughout 2023.

The country's consumers are also gloomy about the year ahead. The consumer confidence indicator fell to a record-low level of 49.7 points in September. This was considerably lower than the 110 points recorded in the 2021 summer.

Among retailers, the confidence indicator also decreased, from 91.3 points in August to 81.7 points in September. The government will present its budget next week.