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Q4 GDP -0.6% yr/yr, -0.6% qtr/qtr
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Economy expected to shrink in 2023
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Riksbank seen raising rates in Feb, April
(Adds analyst comment)
By Simon Johnson
STOCKHOLM, Jan 30 (Reuters) - Sweden's economy ground to
a halt in the fourth quarter as inflation and the war in Ukraine
hit households and businesses, preliminary figures from the
Statistics Office showed on Monday.
The economy held up well through most of last year, but a
slowdown has been widely forecast amid a cost of living crisis
and surging interest rates.
Gross domestic product (GDP) fell 0.6% from the previous
three-month period and was down 0.6% from the year-earlier
quarter.
In December, the economy shrank 0.5% on the month and was
down 1.8% from a year earlier, in a prelude to what is expected
to be a tough year ahead.
"Winter may be longer and colder than we thought just a few months ago," Finance Minister Elisabeth Svantesson said last week. The government expects the economy to shrink 0.7% this year. Banking group Nordea, however, said it now expects GDP to fall by around 2%, not least as a result of further rate hikes and the effects of falling house prices on consumption and investment. "This could make the Riksbank think twice about hiking rates, Nordea economist Torbjorn Isaksson said in a note. "However, inflation is still far too high, the SEK is weak and the ECB is steaming ahead with rates hikes. Thus, we stick to our view that the Riksbank will lift rates by 50 basis points in February and by 25 basis points in April." There are some bright signs, however.
Inflation looks to be close to its peak and growth has proven more robust than expected across much of Europe. Germany may even avoid a recession this year. Nevertheless, the European Central Bank has warned it will continue to hike rates in the coming months and the Riksbank may be forced to follow in its footsteps or risk higher import prices. The Riksbank announces its next policy decision on Feb. 9. For the full year 2022, the economy grew 2.4%, said the Statistics Office, which provides no detail with its flash estimates. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Swedish economy: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Simon Johnson; editing by Jason Neely)
Messaging: simon.c.johnson.reuters.com@reuters.net))