The economic barometer examines monthly how companies and households view the economy. In September, it rose marginally and is therefore in a more gloomy mood than normal, writes KI in a press release.
At the end of the year, the economy is expected to recover somewhat, but according to KI, the recession that Sweden is in will last longer than previously thought. According to calculations, it may take until the end of 2026 before it reverses.
– This is mainly due to the fact that households have not increased their consumption. We have seen that households have become more positive and have believed that consumption would pick up now that interest rates were lowered, but it has taken longer, says KI’s head of forecasting Ylva Hedén Westerdahl, at a press conference.
However, KI believes that low inflation and lower interest rates will boost household consumption by the end of 2024, according to their latest economic forecast.
Lower the policy rate
Inflation will this year be 1.8 percent according to the CPIF measure and fall to 1.4 percent in 2025. The Riksbank is expected to gradually lower the key interest rate to 1.75 percent by next summer, but according to KI there is room for faster interest rate cuts.
KI estimates that unemployment will peak this year at 8.4 percent, and that it will decrease in the coming years.
Households pessimistic
For households, the indicator rose for the twelfth month in a row and now shows a normal mood. According to KI, households remain pessimistic about both their own economy and Sweden’s economy, compared to a year ago. However, there is great optimism about the future.
– One of the reasons why they are pessimistic is because they have been hit hard by rising prices, falling real wages and a higher interest rate, says Ylva Hedén Westerdahl.