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Swedbank Cuts Sweden's Growth Outlook

Swedbank downgraded Sweden's growth projection as sagging global trade are spilling over into the export-sensitive economy.

According to the latest Swedbank Economic Outlook, gross domestic product will grow 1.2 percent in 2020 instead of 1.7 percent projected in April. The outlook for 2019 was trimmed to 1.3 percent from 1.4 percent.

The bank forecast Sweden to grow nearly 1.5 percent in 2021. "This is still considered manageable," the bank said.

Although the Riksbank has signaled that the next rate hike will come at the end of the year or beginning of next year, Swedbank forecast the central bank to keep its rate unchanged at -0.25 percent throughout the forecast period.

On housing market, Swedbank said the housing market still poses a risk for the Swedish economy. Housing investment is expected to decline by about 10 percent in 2019.

Inflation is forecast to fluctuate between 1.5 percent and nearly 2 percent during the forecast period. Despite the slowdown in the economy, underlying inflation is expected to rise slightly.

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