SwedenLivingWorld world_2_fill WorldBusiness BusinessSports sports-soccer SportsEntertainmentEntertain

Lower interest rates and taxes can boost Sweden

The Swedish Central Bank's interest rate cuts and the government's tax cuts will boost the Swedish economy next year. This is what the economists at the major bank Danske Bank believe.

» Updated: 03 October 2024, 11:43

» Published: 03 September 2024

Lower interest rates and taxes can boost Sweden
Photo: Stefan Jerrevång/ TT

The bank is lowering its growth forecast for this year to 1.2 percent, down from the previous forecast of 1.5 percent. However, for 2025, the forecast is raised to 2.4 percent, up from 2.0 percent.

"Looking ahead, households can expect significantly lower interest expenses and noticeably lower income taxes, as announced by the government, which will boost real income growth," writes Danske Bank.

Continued decline in inflation

As for inflation, it is still pointing downwards, both for CPIF inflation, which they believe has established itself below the Swedish Central Bank's target level of 2 percent, and core inflation, according to Danske Bank.

Their forecast for CPIF inflation in 2025 is lowered to 0.6 percent, compared to the previous 1.0 percent.

The Swedish Central Bank is expected to lower the repo rate six times in six meetings until March next year, according to Danske Bank's economists. This would bring the repo rate down to 2 percent by the summer of 2025, from today's 3.50 percent.

The Swedish Central Bank is thus expected to move faster and further than the European Central Bank (ECB) when it comes to interest rate cuts. The interest rate differential that is likely to arise against the ECB will not stop the Swedish Central Bank, according to Danske Bank.

"Not a temporary dip"

"Our forecast indicates that inflation will remain well below the 2 percent target for a foreseeable future. This is not a temporary dip but a more sustained trend, which provides room for a continued expansionary monetary policy that can strengthen the economy further," says Danske Bank's chief economist Michael Grahn according to the press release.

Unemployment is expected to rise to 8.4 percent this year, up from 7.7 percent last year, according to the new Danske Bank forecast. A slight decline is expected in 2025, down to 8.2 percent.

Tags
TTT
By TTThis article has been altered and translated by Sweden Herald

More news

4,000 to Leave the Car Giant
1 MIN READ

4,000 to Leave the Car Giant

The VW Union Takes a Stand Against Factory Closures
1 MIN READ

The VW Union Takes a Stand Against Factory Closures

Slovakian Nuclear Power Plant Plan Approved
1 MIN READ

Slovakian Nuclear Power Plant Plan Approved

Giant boost for Turkish minimum wages on the way
1 MIN READ

Giant boost for Turkish minimum wages on the way

6 MIN READ

Reduced risk of power crisis in winter
1 MIN READ

Reduced risk of power crisis in winter

Trump's Minister Paves the Way for Quick Tariff Decision
3 MIN READ

Trump's Minister Paves the Way for Quick Tariff Decision

Tough times for Chinese car giant
1 MIN READ

Tough times for Chinese car giant

Double rate cut of Icelandic interest rate
1 MIN READ

Double rate cut of Icelandic interest rate

Upturn on the stock market – in line with the rest of the world
1 MIN READ

Upturn on the stock market – in line with the rest of the world

The Gaming Company's Stock Soars - Confirms Purchase Inquiry
1 MIN READ

The Gaming Company's Stock Soars - Confirms Purchase Inquiry

Japan Sets Tourist Record - Attracts increasing number of tourists
1 MIN READ

Japan Sets Tourist Record - Attracts increasing number of tourists

Denmark's economy is picking up.
1 MIN READ

Denmark's economy is picking up.

Unexpectedly high inflation in the UK
1 MIN READ

Unexpectedly high inflation in the UK

FI wants to see strengthened protection of financial companies
1 MIN READ

FI wants to see strengthened protection of financial companies

It is clear that the company's stock price has been driven by the strong demand for its products, the global AI boom.
2 MIN READ

It is clear that the company's stock price has been driven by the strong demand for its products, the global AI boom.

The Housing Market is Cooling Down - Fewer New Homes
2 MIN READ

The Housing Market is Cooling Down - Fewer New Homes

Smooth in China - Gloomy in Japan
1 MIN READ

Smooth in China - Gloomy in Japan

Record-high fee increases burden households
2 MIN READ

Record-high fee increases burden households

Most Up on Wall Street
1 MIN READ

Most Up on Wall Street