Swedish GDP Declines by 0.2% in May 2025 Amidst Economic Shifts
Sweden's GDP unexpectedly shrinks by 0.2% in May 2025, prompting revised growth forecasts.
Key Points
- • Sweden's GDP fell by 0.2% in May 2025, contrary to a 0.3% expected increase.
- • The decline is attributed to lower service production and reduced government output.
- • Household consumption decreased, contributing to the economic downturn.
- • The government revised its GDP growth forecast down to 0.9% for 2025.
In May 2025, Sweden's Gross Domestic Product (GDP) experienced an unexpected decline of 0.2% compared to April, contrary to expectations of a 0.3% increase. This downturn, reported by Statistics Sweden (SCB), was largely attributed to a decrease in service production and lower output from government agencies. Mattias Kain Wyatt, an economist at SCB, emphasized that household consumption has also diminished, contributing to the economic downturn alongside a weakening in retail trade. The results were consistent with economic forecasts that had anticipated a 0.2% decline.
Looking at year-over-year data, the calendar-adjusted GDP for May 2025 was 0.5% higher than in May 2024, although notable reductions were seen from previous months where the GDP had risen by 0.4% in April. The most recent statistics paint a concerning picture, with households curtailing spending and a significant drop in industrial order intake. Given these developments, the government has revised its GDP growth forecast downward, now projecting only a 0.9% growth for the current year and 2.6% for 2026, as stated by Finance Minister Elisabeth Svantesson during a recent press conference, signaling a shift towards a 'broken recovery' in the economy.
The decline in household consumption and the weakening of net trade in goods underscore the challenges facing the Swedish economy, as inflationary pressures and shifts in consumer confidence continue to impact economic activity. In the face of these developments, analysts will be watching closely for subsequent indicators that could provide further insight into the direction of the Swedish economy over the coming months.