The Swedish economy showed weak growth during the third quarter, with a decline in September followed by further contraction in October, according to the latest report by SCB.
Household consumption has remained sluggish throughout the year, with no signs of a turnaround in sight. In the third quarter, consumption volume was nearly unchanged compared to the previous quarter, staying at the same level as earlier in the year.
While the consumption of food and non-alcoholic beverages saw a slight increase during the third quarter, it still remained lower than in 2021. Higher prices in 2022 and 2023 have led to a decrease in the volume of food consumption. Meanwhile, the consumption of restaurant and lodging services continued to decline, partly due to lower real wages and higher interest costs.
“One reason for the weak consumption is that households have continued to save a relatively large portion of their incomes,” said Johannes Holmberg, an economist at SCB, in a press release.
The low economic growth that has characterized the past two years, with high inflation and interest rates, has made households cautious, prioritizing saving over consumption, according to SCB. However, the high savings rate indicates that there is room for increased consumption in the future.
“But the question of whether households choose to increase consumption or maintain their savings remains,” SCB noted.
It is crucial for policymakers and economists to closely monitor the trends in household consumption and savings to gauge the overall health of the Swedish economy. As the global economic landscape continues to evolve, understanding these dynamics will be essential in navigating the challenges and opportunities that lie ahead.