The Ministry of Finance revises upwards its growth forecasts this year
Today, Minister of Finance Mikael Damberg presents the latest forecasts from the Ministry of Finance on the economic situation. The Swedish economy is expected to grow 4.9% this year, an upward revision of 0.5 percentage point from previous forecasts. Sweden’s GDP has returned to pre-crisis levels.
The situation regarding the pandemic remains uncertain, but so far the Swedish economy has recovered strongly. This year, GDP is at a higher level than before the pandemic. Growth in 2021 is mainly driven by household consumption – which has fallen sharply in the wake of the pandemic – but also by investment.
“The recovery has been rapid compared to previous economic downturns and the Swedish economy has performed well compared to many other EU countries. The fact that we entered the crisis with historically strong public finances was crucial for the rapid recovery, ”said Finance Minister Mikael Damberg.
Growth next year is also expected to be high, albeit slightly lower than this year. The Ministry of Finance expects GDP growth of 3.4% in 2022 and 1.4% in 2023.
The slight slowdown in growth next year is due in part to the fact that the recovery phase is partly over and disruptions in global supply chains and component shortages in the industry mean that many companies continue to have difficulty meeting demand. The recent increase in the spread of COVID-19 is also expected to affect economic activity.
As always, there is great uncertainty associated with forecasting. This is especially true now, given the pandemic. It is difficult to predict the evolution of infection rates. However, the economic impact of behavioral changes and current infection control measures is expected to be more limited now than during the acute phase of the pandemic.
“To some extent, the world has learned to deal with the virus and the restrictions are designed differently than at the start of the pandemic. As a result, savings should be less severely impacted. At the same time, we must remember that the conditions ahead can change quickly. Infection rates are on the rise again in many countries, which of course can have economic consequences, ”said Mr Damberg.
Energy prices rose sharply in Europe in the second half of the year. This has contributed to a high rate of inflation in many European countries, including Sweden. The inflation rate in Sweden is expected to slow over the next year as energy prices are expected to contribute less.
As in many other countries, the pandemic has had a major impact on the labor market in Sweden. However, the recovery has started vigorously and is expected to continue as employment increases rapidly next year. Unemployment, which is forecast at 8.9% this year, is expected to fall to around 7% in 2023 – an estimate that remains unchanged from the previous forecast.
The financing capacity of general government is estimated at -0.8% of GDP in 2021. This means an improvement of almost 2% of GDP compared to 2020, when public finances were weighed down by recession and crisis measures. of great magnitude. Net lending is expected to balance in 2022 and be further strengthened in subsequent years. At that point, the surplus in public finances will help reduce public sector debt. Sweden’s gross debt as a percentage of GDP is among the lowest among EU member states, and the backers for the Swedish economy are good.