Sweden forecasts 0.9 pct economic growth in 2025, recovery in 2026
HELSINKI, June 17 (Xinhua) -- Sweden's economy is projected to grow 0.9 percent in 2025, with a stronger expansion of 2.7 percent expected in 2026, the Swedish National Institute of Economic Research (NIER) estimated in an outlook report published Tuesday.
The institute attributed the current economic sluggishness to both external and domestic factors. Internationally, U.S. trade policy, marked by higher tariffs and policy uncertainty, is weighing on the global economy, leading to weak demand in Sweden's export markets. This trend is likely to persist into next year.
Domestically, Swedish households have been cautious about increasing consumption over an extended period, further restraining growth.
To support the recovery, the Swedish Central Bank is expected to lower its guidance interest rate from the current 2.25 percent to 1.75 percent, amid subdued inflation and weaker overall activity, noted the NIER.
Despite the current challenges, NIER anticipates an economic recovery in the second half of 2025, driven mainly by increased public and private investment in production and a gradual pickup in consumer spending.
Wages are forecast to rise by 3.5 percent in both 2025 and 2026, boosting household purchasing power. Inflation has stabilized and is projected to fall below 2 percent in 2026.
Nonetheless, labor market conditions remain difficult. According to the Swedish Statistics Agency, unemployment stood at 9.7 percent in May, one percentage point up from a year earlier. The NIER expects unemployment to remain around 9 percent in the near term.
The NIER is a government agency operating under the Ministry of Finance.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
4 hours ago
- New Straits Times
Swedish government plans to ease mortgage rules to help first-time buyers
STOCKHOLM: Sweden's government said on Tuesday it planned to ease mortgage rules to help first-time buyers and those without capital for a deposit to get into the housing market. Under the plan, people wanting a mortgage will be able to borrow up to 90 per cent of the value of their property, up from the current 85 per cent. A current requirement for the heaviest borrowers to pay back 3 per cent of their loan each year will be dropped. The new rules are expected to be introduced at the start of next year. "The new proposals will make it easier, for example, for first-time buyers and young families to get onto the property ladder," Housing Minster Andreas Carlson said. "At the same time, we have taken into consideration financial stability through measures to hold back indebtedness." The proposal broadly reflects recommendations in a white paper last November. Critics have said that tough mortgage rules, introduced after the financial crisis of 2008-9, are necessary to reduce risks in the banking system. Swedish home-owners are among the most highly indebted in Europe, with debts of around 180 per cent of disposable income, down from a peak of around 200 per cent in 2021. Most mortgages are floating rate, making households sensitive to interest rate changes and amplifying swings in the economy. The government said it also planned to strengthen the central bank's role in macroprudential oversight. The central bank will take over responsibility for setting the level of banks' countercyclical financial buffer, which has up to now been set by the Financial Supervisory Authority.
The Star
6 hours ago
- The Star
Trump's tax, budget bill to add 2.8 trln USD to deficit: CBO
WASHINGTON, June 17 (Xinhua) -- U.S. President Donald Trump's tax and budget bill will increase the deficit by 2.8 trillion U.S. dollars over the next decade, according to a report released Tuesday by the U.S. nonpartisan Congressional Budget Office (CBO). The bill, also known as the "One Big Beautiful Bill Act," is a core agenda for the Trump administration, encompassing a range of policies including taxation, border control, and artificial intelligence. The bill sparked sharp partisan debate within the United States over whether it would increase the national debt. "It's not only not paying for all of itself, it's not paying for any of itself," Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget, said Tuesday on social media. The bill will also increase the wealth gap in the United States, costing the poorest Americans approximately 1,600 dollars per year, while increasing the average annual income of the wealthiest households by 12,000 dollars, according to the report released by the CBO on June 12. Due to several reports expressing pessimism about the bill and the government's economic measures, the CBO has faced criticism from some Republican leaders. House Speaker Mike Johnson said the CBO is "notorious for getting things wrong." White House Press Secretary Karoline Leavitt described the CBO's projections as "absurd." As Trump urges Congress to approve the bill before July 4, the CBO's predictions could lead to further controversy between the two parties over the bill.
The Star
7 hours ago
- The Star
U.S. stocks tumble as geopolitical conflicts, weak data dent sentiment
NEW YORK, June 17 (Xinhua) -- U.S. stocks ended lower on Tuesday, as escalating geopolitical tensions and disappointing retail sales data weighed on investor sentiment. The Dow Jones Industrial Average fell by 299.29 points, or 0.70 percent, to 42,215.8. The S&P 500 sank 50.39 points, or 0.84 percent, to 5,982.72. The Nasdaq Composite Index shed 180.12 points, or 0.91 percent, to 19,521.09. Ten of the 11 primary S&P 500 sectors ended in red, with health and consumer discretionary leading the laggards by losing 1.64 percent and 1.55 percent, respectively. Meanwhile, energy bucked the trend by adding 1.03 percent. All major indexes extended losses and closed lower after U.S. President Donald Trump was demanding Iran's "unconditional surrender" on his social media account, and claiming the United States knows the location of the country's leader. French President Emmanuel Macron said Monday that Trump offered a ceasefire between Iran and Israel. However, Trump said his departure from the G7 had "nothing to do with a Cease Fire. Much bigger than that." Markets had staged a cautious rebound on Monday amid reports Iran was open to ceasefire negotiations and restarting talks over its nuclear program. But on Tuesday, fresh headlines indicated the United States is contemplating military strikes, increasing the threat of prolonged instability in the Middle East. Alongside geopolitical anxiety, investors are also contending with renewed uncertainty around trade policy. As the deadline nears for lifting the pause on Trump-era tariffs, U.S. officials are scrambling to cement new trade agreements during the G7 summit. A trade deal was finalized Monday between Trump and British Prime Minister Keir Starmer, but progress with other partners remains elusive. Adding to the pressure was a disappointing read on U.S. retail sales, which fell 0.9 percent in May, more than economists had expected. The decline suggests that consumers may have front-loaded spending in anticipation of higher prices from incoming tariffs and are now pulling back. "The economy is slowing with consumers nervous about exactly what lies ahead and are choosing to save overall rather than flash some cash at the shops and malls," said Chris Rupkey, Fwdbonds chief economist. Markets are now turning their attention to the Federal Reserve's two-day policy meeting which began Tuesday. The Fed is widely expected to hold interest rates steady on Wednesday, but investors will be watching closely for any changes to the central bank's projections. Questions remain over whether policymakers still anticipate two rate cuts in 2025, especially amid recent signs of easing inflation and fragile consumer demand.
