The Swedish Central Bank lowered the repo rate to 2.5 percent as recently as Thursday and expects it to land at 2.25 percent next year.
The National Institute of Economic Research points to a significantly lower rate in 2025.
Our forecast is that the Swedish Central Bank, a fairly large difference from themselves, will lower the rate to 1.5 percent next year, says forecast chief Ylva Hedén Westerdahl at a press conference.
According to the National Institute of Economic Research, the recovery in the Swedish economy could have gone faster if the Swedish Central Bank had been faster in lowering the repo rate.
"To support the recovery in 2025 and 2026, it would be suitable to lower the repo rate relatively quickly", the National Institute of Economic Research writes in its report.
Then it takes off
The National Institute of Economic Research notes that the low-growth economy in Sweden continues to deepen. The fact that the recovery is delayed has not least to do with Swedish households being cautious and consumption will continue to be weak for a while, the National Institute of Economic Research predicts.
But it will take off. Our forecast is that consumption will rise again in the second quarter of next year, says Ylva Hedén Westerdahl.
The National Institute of Economic Research also sees lower growth for 2025 compared to previous forecasts. The forecast is lowered from 1.8 percent to 1.2 percent.
In 2026, we see the Swedish economy taking off well, she continues.
Furthermore, higher unemployment is expected next year, 8.5 percent compared to the previous 8.2 percent.
In a separate measurement, the National Institute of Economic Research notes that the sentiment among Swedish households has deteriorated sharply.
The barometer indicator for the entire economy was unchanged at 97.5 in December. But the households' confidence indicator falls sharply, down 4.9 units to 96.7.
"The decrease is mainly explained by less optimistic expectations for both their own economy and Sweden's economy in twelve months", the National Institute of Economic Research writes.
More positive
For other sectors in the economy, the development is overall more positive than in November, according to the measurement.
For retail, the confidence indicator rises by 4.4 to 111.0, and for construction and civil engineering, there is a continued recovery, up by 1.6 to 100.2 – which can be described as a "normal" sentiment according to the National Institute of Economic Research.
The manufacturing industry is more gloomy, and there the confidence indicator only moves marginally upwards by 0.2 to 96.5. For the service sector, there is an increase by 1.6 to 98.9.
