According to data released on Wednesday, Sweden’s economy will stagnate in 2019 due to rising interest rates and increasing inflation, casting a shadow over people and businesses as they get ready for challenging times.
The economy had a great start to the year but is now beginning to feel the effects of the conflict in Ukraine and the rising energy prices it has brought.
The National Institute of Economic Research (NIER) issued a prognosis on Wednesday predicting that the gross domestic product will decrease in 2023, albeit by a negligible 0.1%, following growth of 2.7% this year.
The NIER predicted that headline inflation will be higher than expected in August, averaging 7.7% this year and 4.6% in 2023.
The central bank wants the inflation rate to be 2%.
The Riksbank raised the policy rate by a full percentage point in August as a result of headline inflation reaching 9.0%, which was the highest one-time increase since the early 1990s.
As the central bank frontloads its response to inflation reaching 30-year highs and works to stop prices from spiralling much higher, more is expected.
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