Swedish output shrank in February, leaving the possibility of a first-quarter recession still hanging over the largest Nordic economy.
(Bloomberg) — Swedish output shrank in February, leaving the possibility of a first-quarter recession still hanging over the largest Nordic economy.
Indicator data for gross domestic product showed a contraction of 1% from a month earlier, matching the median forecast of economists. The gain for January was revised slightly higher to 2.2% in January, Statistics Sweden said on Thursday.
With the economy already having contracted in the final quarter of 2022, the outcome for March — and therefore for the first three months of 2023 — may prove crucial in determining whether a recession took hold.
The Swedish economy is likely to be the worst hit in the Nordic region this year, suffering both inflation at three-decade highs and a housing-market slump. The country might be the only European Union member state to experience a full-year contraction this year, according to European Commission forecasts.
While central bank policy makers remain committed to tame consumer prices, the latest data may further ease pressure on them to accelerate interest-rate hikes.
A longer-than-forecast wage agreement reached by Swedish labor-market parties earlier this month — seen as reducing the risks of a price-wage spiral — has tempered speculation that the Riksbank could raise borrowing costs by more than half-point later this month.
Read More: Sweden’s Wage Deal Is Seen Giving Riksbank Breathing Space
–With assistance from Joel Rinneby.
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