Bank economist: "Households will have a tough time"
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Loading... - Robert Armstrong
- 27 Jan 2023
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Inflation has peaked. But a weak krone causes that and interest rate increases will continue for a while longer for all interest-sensitive Swedes, according to a new economic forecast from Swedbank.
- Households will have a tough time, says chief economist Mattias Persson.
A real slowdown in consumption when mortgage rates rise, higher unemployment and more bankruptcies in retail, hotels and restaurants are on the cards. GDP in Sweden is expected to fall by 1.3 percent this year, according to Swedbank.
- It has to do with the Riksbank needing to act more than we previously thought. And partly I would say that it has to do with the fact that we have a very weak krona, says Mattias Persson.
Pensioners and single people
Especially the first quarter of this year will be a tough transition for the most vulnerable households with high inflation and rising interest rates.
- It will be worst for those who spend a large part of their income on accommodation and food.
At the same time, Swedish households take considerably more of a beating than those in the rest of Europe and the US, notes Persson. Partly it is about the krona being so weakened by the inflation shock, partly it is an effect of the fact that Swedes are generally more indebted and more sensitive to interest rate increases.
This in turn leads to the housing market in Sweden standing out as one of the hardest hit in the entire Western world right now. And prices are expected to continue downward for a while, according to Swedbank's forecast, which predicts a 20 percent decline before turning around.
- But there is a risk that this could be a somewhat sharper decline, says Mattias Persson. Read More…
