Swedish govt sees deeper downturn as it launches inflation-focused budget bill

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STOCKHOLM, April 17 (Reuters) – The economic downturn in Sweden this year will be somewhat deeper than initially thought, the government said in a fresh economic forecast on Monday as it delivered a restrained budget aimed at not aggravating soaring inflation.

Gross domestic product (GDP) is seen contracting 1.0% against December’s forecast for a fall of 0.7%, the government said in a forecast delivered with its spring budget bill.

“Sweden is in an economic downturn with the highest inflation for over 30 years,” Finance Minister Elisabeth Svantesson said in a statement.

“Against that background, the government is proposing a spring budget to protect particularly vulnerable households and press down on inflation.”

Headline inflation in 2023 is seen at 5.9% this year vs 6.0% seen in December.

The government had already announced plans to give more money to the military, adult education and for a temporary increase of housing allowance for households struggling with the cost of living crisis.

It also said it would extend tax cuts on agricultural diesel through 2025.

New spending and tax measures in the budget, which is not usually used by governments to announce major spending initiatives, totalled 4 billion Swedish crowns ($387.39 million).

($1 = 10.3254 Swedish crowns)

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