Expect rising unemployment

Our chief analyst, Torbjörn Isaksson, and senior analyst, Andreas Jonsson, have just published an update on the outlook for the Swedish labour market.

Our previous forecast was GDP falling by 0.5% during Q4 q/q. On the back of the flow of data released today, we now revise our forecast downwards to -1.0%, and around 2% y/y. The Riksbank believes that GDP was unchanged on a quarterly basis and increased by 3.4% y/y.

The reduced production will impact the labour market and we expect unemployment to increase above 8% this year. With low inflation and rising unemployment, there are few alternatives for the Riksbank other than to cut rates. We therefore continue to believe that the Riksbank will cut the repo rate in February and at subsequent meetings, bringing the repo rate to 0.75% in September this year.

Best regards,
Mikael Sarwe

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