Danske Bank projects growth for Sweden’s economy in 2024

Danske Bank has provided a brighter outlook for Sweden’s economy, expecting a rebound with a growth rate of 1.3% in 2024 after a slight decline of 0.2% this year. This forecast stands in contrast to more pessimistic views from other analysts. The bank attributes this anticipated recovery to several factors:

• Strong manufacturing investments that are currently underway.
• Stable consumer spending and retail sales figures.
• A weak Swedish krona, which is likely to enhance the competitiveness of exports.

Notably, Sweden’s industrial production is performing better than that of Germany, indicating a robust manufacturing sector.

In response to inflation nearing its target rate of 2%, the Riksbank, Sweden’s central bank, is expected to start reducing interest rates from their present peak of 4%. The initial cut is projected for June, with additional decreases anticipated throughout the remainder of the year.

While Sweden faces challenges, particularly from the residential construction sector which has experienced a downturn, there are signs of stabilization in this area. This positive shift contributes to the overall economic resilience.

The regional outlook also includes Denmark, where economic stagnation has been partially mitigated by production growth from pharmaceutical giant Novo Nordisk (NYSE:). Meanwhile, Norway’s central bank, Norges Bank, is considering interest rate cuts starting in the spring based on economic evaluations that suggest four cuts in the next year and three additional reductions in 2025. Furthermore, Finland is expected to emerge from its recessionary phase during 2024 as export demand increases and inflation rates decelerate.

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