Scandinavia's largest bank, Nordea Bank Abp (OTC:NRDBY), has revised its prediction for Sweden's GDP in 2024, now forecasting a 0.5% contraction due to persistently high interest rates. This is an upward revision from the bank's earlier forecast of a 0.2% contraction, reflecting an acknowledgement of the resilience of Sweden's economy amidst rapidly increasing borrowing costs.
The bank drew parallels between Sweden's economic situation and the resilience exhibited by the US economy in similar circumstances. However, it warned that the high interest rate environment is likely to strain households, leading to weak spending and a projected drop in housing prices between 5-10%.
Export markets are not expected to provide a buffer against this downturn. Despite these challenges, economists at Nordea Bank view the situation as a "soft landing", attributing it to Sweden's robust economic foundation.
In addition to these economic impacts, a moderate decline in employment is also anticipated. This underlines the labor market's resilience in the face of economic contraction. The forecast paints a picture of an economy navigating through a challenging environment while leveraging its inherent strengths and resilience.
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