According to a statement by Sweden’s national Debt Office, the country is set for weaker central government finances in 2030, which in turn will cause a rapid slowdown in the country’s economy.
“Since the May forecast, we have seen inflation continue to rise and interest rates increase while the economy is slowing down…This creates an increased borrowing requirement for the central government, which the Debt Office is financing with short-term borrowing,” explained the Debt Office.
The Debt Office noted that the budget balance would be adversely affected by expected disbursements of electricity price compensation, with a budget surplus of 91 billion Swedish Krona in 2022 and 27 billion in 2023, compared to 102 billion and 75 billion in the May forecast.
Inflation in the country was seen averaging 7.8% for 2022 and 5.4% for 2023, compared to 5.5% and 2.8% in May.
The government’s debt is expected to decrease to 18% of GDP by December 2024, compared to 22% at the end of 2021.