STOCKHOLM (Reuters) -Sweden’s Social Democratic government on Thursday cut its outlook for growth next year as it warned the impact of Russia’s war in Ukraine and soaring inflation would increasingly hit the economy.
The minority government, which faces uncertain general elections in September, raised its outlook for economic growth to 2.3% this year from a June forecast of 1.9%, but it slashed its prediction for next year to just 0.4% from 1.1%.
“We are approaching tougher times and a low growth phase,” Finance Minister Mikael Damberg told a new conference.
Damberg warned of a sharp slowdown in the economy already during the second half of this year with high inflation and rising unemployment to come in tow. “This will require making priorities and handling fiscal policy responsibly,” he said.
The government, which is running neck-and-neck with the right-wing opposition bloc ahead of the Sept. 11 vote, forecast inflation would hit 7.3% this year and 3.9% in 2023, against previous forecasts of 6.1% and 2.9%, respectively.
(Reporting by Anna Ringstrom, Stine Jacobsen, Simon Johnson and Niklas Pollard, editing by Terje Solsvik)
