In Sweden, the gross national product decreased by 0.6 percent in the last quarter compared to the previous quarter. The European economic giant Germany’s economy also shrank.
Mixed German and Swedish gross domestic products (GDP) counted at the end of the year. Zero growth had been predicted for the German economy, but according to official statistics, the European economic giant contracted by 0.2 percent in the last quarter of the year compared to the previous quarter. The growth figure for the whole year was 1.8 percent.
In Sweden, GDP fat in the last quarter, 0.6 percent compared to the previous quarter. December’s GDP was 1.8 percent lower than in other Decembers of the year.
The German economy was seen to have suffered from Russia’s war of aggression in Ukraine, as a result of which the price of energy rose significantly. Economist at LBBW bank Jens-Oliver Niklasch estimates that the figure reinforces the expectation of at least a short recession this year. The bank predicts that the German economy will shrink by half a percent this year.
The German government’s forecast is more optimistic, promising 0.2 percent growth for this year. The government still predicts a 0.4 percent contraction in the fall, but the country’s economy has since shown signs of recovery.
The energy price cap, procurement of alternative energy sources, government subsidies and a mild winter have eased the economic situation and prospects.
in Sweden the readings at the end of the year came as a surprise, as economists had expected a small growth for the rest of the year.
“This is quite a surprise. The number is really weak and much weaker than we expected,” said the SEB bank economist Olle Holmgren.
He estimates that the background is weaker consumption and the increase in companies’ inventories, as production has continued despite the weakening of demand.
However, for the whole year, the Swedish economy is expected to have grown by 2.4 percent compared to the previous year.
Growth figures are also closely monitored by central banks, but expectations of future interest rate hikes are unchanged. This and next week, several increases in the key interest rate are expected. First up is the US central bank Fed, which is expected to raise interest rates by 0.25 percentage points on Wednesday. This is the eighth consecutive increase from the Fed.
An increase of 0.5 percentage points is expected from the European Central Bank ECB on Thursday, and the same amount is expected from the British Bank of England. A 0.5 percentage point increase is also expected from Sweden’s central bank when it decides on interest rates on Thursday next week.
Correction 30.1.2023 at 5:09 p.m.: King Charles XVI Gustav is in the picture one from the left, not the other from the right as was wrongly claimed in the caption.