By Johan Ahlander
STOCKHOLM (Reuters) – Sweden’s economy fared much worse than previously thought in the fourth quarter of 2022 as inflation and the war in Ukraine hit households and businesses, figures from the Statistics Office showed on Tuesday.
Sweden’s economy contracted 0.9% in the fourth quarter compared to the previous year, final growth figures showed. The figure was much worse than a preliminary estimate that indicated the economy had grown 0.6%.
Higher interest rates and the ripple effects of the war in Ukraine have been widely expected to put the brakes on the economy, but the reading was worse than anticipated.
“The decrease is noticed in many parts of the economy with broad declines in business investments and household consumption,” the Statistics Office said in a statement.
The economy contracted 0.9% in the fourth quarter compacted to the third quarter, worse than flash figures which showed a decline of 0.6%.
“Declining household consumption, investments and exports all contributed to the drop compared to the previous quarter and a large negative contribution from inventories was also important,” SEB said in a note.
J.P. Morgan said the revision and other leading indicators “strongly suggest Sweden is in the midst of a technical recession” but added other quarters were revised up and the outcome should have limited impact on upcoming Riksbank decisions.
The central bank has jacked up rates over the past year and is expected to hike again at its next meeting in April.
The Riksbank’s forecast is for rates to reach around 3.5% from 3.0% currently.
The Swedish economy is expected to contract around 1.1% this year, according to the central bank.
(Reporting by Johan Ahlander Editing by Terje Solsvik and Mark Potter)
