The Riksbank published a speech by First Deputy Governor Anna Breman assessing how escalating global trade barriers could affect the Swedish economy and inflation. She argued that higher tariffs would be negative for export-dependent Sweden and would likely dampen GDP growth, while the net effect on Swedish inflation is uncertain. Breman said the impact would depend on the scope of tariffs, which countries are affected and any countermeasures, noting that weaker growth and demand in Europe could offset inflationary effects. She highlighted channels including global value chains, the possibility of trade diversion to Europe at lower prices, and financial-market volatility and exchange-rate movements, and noted that exports accounted for around 55 per cent of Swedish GDP in 2023, with services representing around 30 per cent of total exports. As a partial offset to trade shocks, she pointed to reforms to raise productivity, including improved education and labour-market matching, investment in new technologies including AI, and measures to support entrepreneurship and a more dynamic business environment. On monetary policy, Breman noted that the Riksbank has cut the policy rate six times by a total of 1.75 percentage points and that the December policy-rate forecast of an unchanged rate is still holding up, while remaining prepared to both raise and lower the rate if the outlook changes. She added that more information will be available ahead of the next monetary policy meeting, including another month of inflation, and that the Riksbank’s current business survey includes specific questions on increased trade barriers to gauge firms’ adaptation.

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