Nordic Outlook Update: World economy slowing, but recession will be mild

So far, the global economy has shown unexpectedly great resilience. Looking ahead, however, households will be under mounting pressure from rising interest rates, high inflation and energy shortages. We have thus lowered our growth outlook for 2023 and 2024. Some businesses have good potential to cope relatively well, which suggests a fairly mild decline from a historical perspective. But the risks in our forecast are on the downside, linked to various consequences of the war in Ukraine and the possibility that central banks may be underestimating the interest rate sensitivity of their economies. Interest rate-sensitive households and weaker fiscal support measures make the Swedish economy more vulnerable than the rest of Europe and the Nordic region. We have lowered our GDP growth forecast for Sweden to -1.5 per cent in 2023, followed by a 1.3 per cent increase in 2024. Swedish inflation will peak at above 11 per cent early next year, and unemployment will climb above 8 per cent. The Riksbank's key interest rate will peak at 2.75 per cent in February, followed by rate cuts in the second half of 2024.