Sweden falls into recession

In the third quarter, Sweden’s economy officially slipped into recession and follows a number of its neighbouring countries succumbing to economic downturn.

The Swedish central bank is expected to reduce interest rates drastically with economists indicating at least a 1 percent drop, in order to reduce the cost of borrowing in order to reignite the economy.

GDP has fallen across both the second and third quarters, down by 0.1 percent and follows the other export driven nations such as Germany, Japan and Singapore into recession with two consecutive contractions.

Retail sales have fallen by 0.6 percent as domestic demand has fallen, as well as demand for exports which has left a black hole in the manufacturing sectors.

Car sales have also been hit, which has meant that the labour market has weakened with the heightened fear that job cuts are looming over the next few months.

The International Labour Organisation had indicated that unemployment will rise to 7.9 percent in 2009 and to 9.4 percent by 2010, having already stood at over 6 percent this year.

Household consumption is down by 0.2 percent as consumers are switching to cheaper products in order to make already tight budgets stretch further.

Meanwhile, the krona has fallen by 0.3 percent to 10.301 against the euro and the yield has fallen on the 5.25 percent government bonds to just 2.18 percent.

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