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ECONOMY

Sweden defies recession forecasts as economy sees surprise upturn

Despite still fighting high inflation and interest rates, the Swedish economy grew more than expected in the first quarter of the year.

Published: 30 May 2023 11:46 CEST
Sweden defies recession forecasts as economy sees surprise upturn
Sweden narrowly avoided a recession in the first quarter of 2023. Photo: Fredrik Sandberg/TT

The top Nordic economy expanded by 0.6 percent in the first three months of the year, avoiding a technical recession following a 0.2 percent contraction in the fourth quarter of 2022.

“The upturn is mainly explained by an increase in inventories and by a strong growth in the export of goods,” Statistics Sweden said in a statement.

Analysts were on average expecting 0.1 percent growth, according to Bloomberg.

A preliminary estimate published by Statistics Sweden at the end of April had put growth at 0.2 percent.

Year-on-year, GDP grew by 0.8 percent in the first quarter of 2022, compared to the 0.3 percent preliminary figure.

The upturn comes despite the central bank’s rate-hike campaign against inflation, which is still hovering around 10 percent.

According to its April forecast, the central bank expects the Swedish economy to contract 0.7 percent for 2023 as a whole.

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ENVIRONMENT

Sweden’s emissions to rise as budget relaxes green targets to fight inflation

Sweden's government conceded that greenhouse gas emissions would rise in the short term as a result of budget decisions, but insisted they would fall in the long term.

Published: 21 September 2023 06:18 CEST
Sweden's emissions to rise as budget relaxes green targets to fight inflation

The conservative administration, run by the Moderates and backed by far-right Sweden Democrats (SD), announced that greenhouse gas emissions would increase by 2030, at least in part owing to heightened tax relief on fuels.

Stockholm wants to reduce fuel and diesel taxes to ease price rises, which peaked last December at 12 percent year-on-year and have hammered Swedes’ purchasing power.

“Following decisions taken between July 1st, 2022 and July 1st, 2023, emissions are expected to increase by 5.9 to 9.8 million tonnes of carbon dioxide equivalent (MtCO2) by 2030, but decrease long term by 1.8 million tonnes by 2045,” according to the draft budget.

Transport emissions notably are set to rise by 3.6 MtCO2 to 6.5 MtCO2 by 2030.

The government said it would not be possible to achieve transport objectives as the reduction in fuel tax notably “contributes to an increase in their consumption, an increase in traffic and a delayed electrification” of on-road vehicles.

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The slashing of those taxes will shrink contributions to the Swedish treasury by around 6.5 billion kronor or some $600,000.

“It will be cheaper to refuel your car,” said Oscar Sjöstedt, an SD lawmaker who helped to draft the budget. The party “will continue to work for a reduction in fuel taxes”, he added.

Sweden has fixed a target of reaching net zero by 2045, five years ahead of an EU target.

“Sweden will pursue an ambitious and effective climate policy which will make it possible to achieve climate objectives,” Climate Minister Romina Pourmokhtari told Dagens Nyheter.

But Green lawmaker Janine Alm Ericson said the budget comprised “a catastrophe for the climate”.

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Greenpeace also criticised the budget as appearing to under prioritise the greening of the economy.

Anna König Jerlmyr, former Stockholm mayor for the Moderates, also criticised the budget for “falling short” in the field of climate.

“We must work to reduce emissions in Sweden, not increase them,” she wrote in a LinkedIn post. “Totally opposite the goals of the Paris agreement.”

Sweden’s independent Climate Policy Council earlier this year criticised the government for policies which it predicted would at least in the short term raise rather than cut emissions.

Article by AFP’s Etienne Fontaine

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