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Sweden faces worst economic slump in EU – Bloomberg – RT Business News


A severe collapse in Sweden’s real estate sector threatens to deepen a looming economic crisis in the Nordic region’s largest economy, Bloomberg reported on Monday.

The outlet warned that after nearly two decades of steady growth, the country’s property market is suffering “a radical change”. House prices have plunged 15% from their peak in nominal terms this year, dragged down by soaring inflation and rising borrowing costs, he said.

Swedish consumers have drastically reduced their spending amid a cost of living crisis. This has caused more difficulties for the real estate sector, where economists now expect the fall in house prices to exceed the forecast drop of 20%.

The Swedish real estate market is the most vulnerable of the EU states due to the country’s monetary policy, which “has faster transmission here than in other economies”, a Swedbank economist, Maria Wallin Fredholm, reportedly said.

The report says that around 64% of Swedes own their own home, but most people don’t have long-term fixed-rate mortgages. They are therefore exposed to rising interest rates, which are now at their highest level in more than a decade following a series of hikes by the country’s central bank. Fears are growing about the shutdown of consumer spending.


Retail sales as well as loans are falling and there are “no positive signals from the national economy, and especially not from households or the housing market”, Annika Winsth, chief economist of Nordea Bank, warned.

Household debt as a percentage of Sweden’s gross domestic product stands at 90%, according to Bloomberg, meaning higher borrowing costs will have a big impact on consumption.

A more acute risk may lie in the commercial real estate market, according to the Bloomberg article. With commercial loans accounting for up to 36% of the loan portfolios of Sweden’s major financial institutions, a severe downturn in this sector could put significant pressure on the country’s banks, the newspaper warns.

Economists warn that the housing market situation could deteriorate further if inflation persists. Sweden is now at risk of falling into the worst recession among the 27 EU countries, analysts say.

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