Sweden faces weaker public finances next year, says the National Debt Office
STOCKHOLM, Oct 27 (Reuters) – A rapid slowdown in the Swedish economy will lead to weaker government finances next year and increased borrowing needs, the National Debt Office said in a statement on Thursday.
“Since the May forecast, we have seen inflation continue to rise and interest rates rise, while the economy slows down,” writes the National Debt Office in a statement.
“This creates an increased borrowing need for the state, which the National Debt Office finances with short-term borrowing,” it said.
The National Debt Office said the budget balance would be negatively affected by expected payments of electricity price compensation and said it saw a budget surplus of 91 billion Swedish kronor ($8.4 billion) this year and 27 billion in 2023, compared with 102 billion and 75 billion in the May forecast.
It forecast Sweden’s gross domestic product to grow by 2.4% this year and contract by 1.0% in 2023, compared with gains of 2.2% and 1.8% respectively in May.
Inflation averaged 7.8% this year and 5.4% next year, compared with 5.5% and 2.8% in May.
It said government debt was expected to decline to 18% of GDP by the end of 2024, down from 22% at the end of 2021.
($1 = 10.8660 Swedish kronor)
Reporting by Terje Solsvik, editing by Anna Ringström
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