The U.S. economy faces potential recession, with implications for Sweden. Economic turbulence, driven by trade policies and rising inflation, could lead to decreased growth and increased unemployment in Sweden. Experts warn of stagflation, and Sweden may need to explore new trade routes to mitigate impacts.
How the U.S. Economic Crisis Could Impact Sweden
How the U.S. Economic Crisis Could Impact Sweden
Economists warn of a recession, and the economic turbulence risks having repercussions in Sweden.
Just over a week ago, the U.S. Bureau of Labor Statistics (BLS) presented grim job figures for June. Fewer new jobs were created—36,000 fewer than expected—and unemployment rose by 4.2%.
Trump called the statistics "rigged," fired the agency head, and presented his own figures showing a strong economy.
Some economists now warn of a recession.
– "It is a serious situation with a large national debt, weak growth, and uncertain job figures," says Elinor Odeberg, chief economist at the politically independent and LO-funded think tank Arena Idé.
Impact on Sweden
Trade policy, with 15% tariffs on goods from the EU, is cited as a reason for the worsening economy.
More expensive imported goods lead to higher prices for consumers and businesses, which hampers trade and investment and can lead to higher inflation and rising interest rates.
American economists warn of stagflation, a situation with low growth and high inflation. And growth in the U.S. has already slowed. This year, GDP is expected to slow to 1.5%, compared to 2.4% last year.
– "Higher inflation usually indicates strong demand in the economy. Now there is concern about both rising prices and recession, which creates uncertainty and hampers investments. What is unique about Trump's policy is that he both implements large tax cuts and increases spending, without considering the growing national debt."
The American economy affects Sweden and can ultimately lead to reduced growth, higher inflation and interest rates, and higher unemployment.
– "Higher tariffs and increased uncertainty in trade policy worsen the situation further. It adds insult to injury," says Elinor Odeberg, adding:
– "The economic uncertainty makes households delay major decisions, which hampers Sweden's growth. Consumption has stagnated since 2022, despite lower interest rates. The pandemic and the war in Ukraine have made households cautious. The uncertainty negatively affects Sweden."
Finding New Trade Routes
At the same time, Elinor Odeberg emphasizes that it is unclear how the EU and Sweden are affected by the tariffs. It is likely that new trade routes will be sought.
The EU has already accelerated negotiations on trade agreements with South America and India, and only one percent of the goods we import from the U.S. are difficult to replace, she argues.
Some Swedish companies in the manufacturing and pharmaceutical industries are directly affected by the tariffs, even though only nine percent of Swedish exports go to the U.S.
The major risk is if the German automotive industry is affected.
– "The U.S. is most negatively affected by its own trade policy, but EU countries like Germany and Sweden also risk being affected, especially if the German automotive industry encounters problems. Since Germany is an economic locomotive for the EU, the effects can spread throughout Europe."