2023-11-26 13:33:21
Published on Nov 26, 2023 at 2:33 p.m.
The Swedish economy is watching for the light at the end of the tunnel. But the tunnel turns out to be longer than expected. After a contraction of half a point of GDP in 2023, the kingdom’s growth is expected to stand at -0.2% in 2024, according to the forecasts published in mid-November by the European Commission.
An anomaly among the Twenty-Seven, while the other contracting economies (Germany, Austria, Hungary, Estonia, Czech Republic, Ireland, Latvia, Lithuania, Luxembourg) all expect a rebound. We will have to wait until 2025 for Swedish GDP to start to rise once more (+1.3%).
“But we had not been hit as much as other countries by the pandemic,” puts Ola Olsson, professor of economics at the University of Gothenburg, into perspective, who invites us to look at these figures in the light of the last five or six years. , during which the Swedish economy did well.
Bad indicators
However, the other indicators are not very good. The unemployment rate, at 7.6% in 2023, is expected to rise by almost a point next year. The former Scandinavian model student would then join Spain and Greece on the podium of countries with the most job seekers within the bloc.
The weakness of the Swedish crown weighs on household incomes, by increasing the cost of imports. In addition, inflation and rising interest rates have significantly affected consumption.
Fluctuating rates
The Swedes are all the more at the mercy of rising interest rates as many of them have taken out property loans at variable rates, in a country where household and private sector debt is already significant.
After years of sustained growth, helped by government subsidies for buyers, property prices have fallen sharply. And promoters are now facing significant financing difficulties.
“Prices have fallen, but there was a sharp increase during the pandemic,” says Ola Olsson. “It’s an adjustment that might prove positive for young people who want to buy.”
Real estate turmoil
Symbol of the bad real estate situation in Sweden, the very indebted land group Samhällsbyggnadsbolaget i Norden (SBB) – which owns nearly two thousand properties in the kingdom, including schools, retirement homes, town halls and even police stations – has seen its rating downgraded to “junk” (speculative category) by several rating agencies.
In October, business bankruptcies reached their highest level since the beginning of recordings in 1999. Heavily penalized by the real estate crisis, the construction sector is the most affected.
Second souffle
However, a positive signal: the Swedish central bank chose on Thursday not to increase its rates once more, anticipating a decline in inflation in the coming months: the Swedish economy might finally find some breathing room.
“We went through a much more serious crisis in the 1990s,” reassures Ola Olsson. Exports and the automobile industry are still doing well. And public debt is much lower than in most other European countries.”
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