“The Swedish economy is treading water. Activity in June 2024 was at the same level as in June 2022,” said Statistics Sweden economist Caroline Ahlstrand.

Statistics Sweden’s so-called “business cycle clock” – essentially a quadrant chart of the state and direction of the economy – shows that ten out of twelve metrics are below their long-term trend, and nine of them are firmly in the field that indicates a recession.

Those nine include the monthly GDP indicator, private sector production, household consumption, newly registered cars, exports of goods, private sector demand, orders in industry, retail trade durables, imports of good and the total number of hours worked.

It’s not all bad news. Sweden’s GDP showed a slight uptick in June, and the central bank, the Riksbank, has in the past year managed to bring inflation down below its two-percent target.

But despite the lower inflation, household consumption continues to fall, warn Statistics Sweden.

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The Riksbank is expected to again lower Sweden’s key interest rate, the so-called policy rate, by 0.25 percentage points on Tuesday, putting it at 3.50 percent.

The policy rate is the central bank’s main monetary policy tool. It decides which rates Swedish banks can deposit in and borrow money from the Riksbank, which in turn affects the banks’ own interest rates on savings, loans and mortgages.

If bank interest rates are high, it’s expensive to borrow money, which means people spend less and as a result inflation drops.