Finance Minister Magdalena Andersson said trade tensions were slowing growth. Photo: Anders Wiklund/TT
In its latest prognosis, the country's finance ministry expects the country's economy to grow by 1.1 percent in 2020, down from the 1.4 percent it predicted in last September's budget.
“We expect growth in Sweden to start slowing,” Finance Minister Magdalena Andersson said as she released the new figures.
“There is a fairly broad consensus on the reason: This is due to trade wars and growing barriers for business, which has generated uncertainty over trade in the future, leading to reduced investment.”
She said that the lacklustre economic growth in Germany had been a particular problem for Swedish exporters.
According to the new prognosis, unemployment will hit 7 percent this year and next year, compared to the 6.4 percent predicted in September.
But Andersson said that Sweden's healthy government finance, the result of years of budget surpluses, put it in a strong position to weather the downturn.
“We can meet this slowdown without any significant cuts,” she said. “We have the lowest government debt since 1977 and compared to other EU countries were are extremely low.”
She described the country's finances as a 'welfare reserve' which would allow the government to keep services running and provide fiscal economic stimulus in bad times.
She also said that the government planned this year to channel more money to Sweden's cash-strapped municipalities in through a special spring budget, recognising that growing unemployment is likely to drag on local budgets.
The government could release emergency financing to the municipalities even earlier, she said.
“It's obvious that requirements are greater now and will be greater in future.”