“Västingår 2023”, the independent economist Claes Hemberg calls it.
But now the krona is strengthening, interest rates seem to be on the way down and purchasing power is expected to strengthen.
– We will save a lot of money in the coming year thanks to the mortgage interest rate going down, says Hemberg.
The inflationary shock that the Swedes have experienced in the last 2-3 years is something we will tell the grandchildren, Claes Hemberg believes.
– I think many would say that they have never experienced anything tougher in their lives, we have to go back to the 70s to experience something similar.
During the inflationary years 2022-2023, Swedes lost ten years of real wage increases, because inflation was far higher than wage increases.
Most likely to turn in 2024
Several things will make it easier for Sweden’s households in 2024, unless there is another major economic shock. For example, the key interest rate is expected to be lowered, the krona to strengthen even more and wages to increase more than inflation in the coming year.
In a year’s time, Hemberg believes that the key interest rate – and thus mortgage interest rates – will be one percentage point lower.
– Sweden will start lowering the interest rate somewhere this summer, so we will have time to lower it four times, by a full percentage point in a year, Claes Hemberg believes.
Finance Minister Elisabeth Svantesson has on several occasions described the situation as an “economic winter”. In the latest update on the Swedish economy, the forecast from the Ministry of Finance showed that unemployment will rise slightly next year, and that growth will remain low until 2025.
Unemployment is expected to rise from 7.7 percent to 8.4 percent next year, according to the forecast.
On the other hand, the Ministry of Finance also believes that inflation will continue to fall, landing at 2.7 percent on average as measured in CPIF.
Then purchasing power will return
Claes Hemberg says that young people who have borrowed large sums are the ones who have had it the hardest – but at the same time they will also catch up faster with better wage growth.
– The young may be the easiest to get out of this because they often have higher salary increases. So in 2024-2025 they will probably experience that they are getting better, says Hemberg.
But it will take several years before Swedes’ purchasing power is back to the level before the inflation shock.
– We will slowly but surely catch up. For some it takes 3-4 years, for others it takes 6-7 years, Hemberg believes.