Nordic Outlook: Soft landing in the shadow of debts and geopolitics

The global economy is decelerating, but at different rates in different parts of the world. Lower inflation, high employment and rising real wages will continue to support a soft landing. Key interest rates have peaked, and the US Federal Reserve will begin its rate cutting cycle by the middle of next year. This will contribute to a moderate recovery during the latter part of our forecast period. Meanwhile geopolitical turmoil is creating growing downside risks. The question of how well economies – and the financial system – can continue to withstand increasingly tight financial conditions is another uncertainty. Swedish GDP will continue to decline until the middle of next year, falling by 1 per cent this year and 0.4 per cent in 2024. Unemployment will rise to 9 per cent, and the Riksbank will begin cutting its policy rate in September next year.