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NIER: Sweden Growth To Be Weaker In Coming Quarters, Rate Hike Seen In 2020

Sweden's economic growth was expected to be weaker in the coming quarters despite a relatively strong labor market, the National Institute of Economic Research said in its quarterly report, released Wednesday.

Gross domestic product was forecast to grow calendar-adjusted 1.9 percent this year, following a 2.5 percent expansion in 2018. Nonetheless, the outlook for 2019 was lifted from 1.5 percent.

The projection for 2020 was lowered to 1.2 percent from 1.4 percent.

The think tank said a weaker outlook was putting a damper on manufacturing investment, and consumers were increasingly negative about the economy.

Swedish exports were forecast to expand by just over 3 percent annually in the near future, which was weak by historical standards.

Further, inflation was forecast to remain slightly below 2 percent over the next couple of years on restrained wage growth. The rate was seen at 1.9 percent each this year and next.

The Riksbank was expected to raise the repo rate in April 2020. The rate was seen at -0.25 percent this year.

Unemployment was expected to bottom out this year at 6.3 percent and head gently upwards to 6.4 percent next year.

On housing market, the think tank said an abundant supply of housing presents a risk of a fresh slump in prices, which in turn make households more cautious in their spending decision. According to NIER, this was the single greatest domestic risk to the real economy.

The NIER said its forecast was based on an assumption that a no-deal Brexit would be avoided, but this was very uncertain.

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