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Modest Growth Expected for Sweden as Housing Market Slows Down

Stockholm, Sweden - Despite a strong economic performance in recent years, Sweden is expected to experience modest growth in 2022, according to a report by Nordic Credit Rating AS (NCR).

Key Drivers of Modest Growth

  • Credit growth will slow down due to a moderation in housing price increases and mortgage volumes.
  • Housing prices are expected to return to their long-term trend level of 6% growth next year, after a period of strong appreciation.

Labor Market and Unemployment

  • Unemployment levels are expected to remain below pre-pandemic levels, but the labor market is likely to tighten further.
  • Global supply chain disruptions will be the major theme for 2022, impacting trade and economic activity.

Funding and Financing

  • Sweden’s increased savings have boosted deposits and demand for domestic covered bonds, providing medium-term funding at very low rates.
  • Access to other forms of long-term senior financing remains strong, according to NCR.

Sovereign Strength and Economic Outlook

  • The country’s sovereign strength is highlighted, with a major credit rating agency average of AAA and a minimum of AAA.
  • Output growth is expected to continue, driven by consumer spending on goods and investments in manufacturing.

Cautionary Signs

  • Supply constraints may inhibit growth, and unemployment rates are structurally higher than in other Nordic countries.

Conclusion

The report concludes that Sweden’s economic outlook remains positive, but with some cautionary signs. The agency advises investors to carry out individual assessments for their own specific use or purpose when using any information provided by NCR.

About Nordic Credit Rating AS

Nordic Credit Rating AS is an independent credit rating agency providing analytical services and ratings on a wide range of debt securities and other financial instruments. The agency’s mission is to provide high-quality, unbiased credit opinions to investors and other market participants.