2022 GDP growth forecast for Sweden raised, but high inflation is a key downside risk

We have raised our full year 2022 GDP growth forecast to 3.6% from 3.3% previously, due to the especially strong flash estimate for Q4 2021. The Omicron wave has probably peaked and has been mild overall, with restrictions largely abolished. However, we expect inflation to stay higher for longer, denting real incomes and presenting a downside risk for our consumption outlook.

What you will learn:

• Input and labour shortages continue to constrain output.
• GDP in Q4 2021 grew by 1.4% q/q according to the flash estimate, almost double our expectation and much higher than indicated by the monthly GDP series.
• Although inflation has surprised on the upside and major central banks have turned hawkish, the Riksbank remains highly accommodative.