Swedish growth likely to remain low until 2017 as fallout of Brexit

The overall impact of Brexit on Sweden’s GDP is strong but can be managed. The scenarios are developed using the work-horse global econometric model NIGEM, said Danske Bank. The impact on Swedish economic growth is expected to range from -0.25 percentage points and -1 percentage points in 2016 and 2017. After that, the effects on GDP will diminish and the growth level would come back to base in five years, according to Danske Bank.

Meanwhile, the impact on inflation is likely to be marginal; however, the effect is small because of flexible stabilization policy's response to both monetary policy actions and exchange rate reaction that balances adverse effects from Brexit, noted Danske Bank.

In the positive scenario, Sweden’s economy is still likely to grow steadily. In the negative scenario, the economy growth is expected to slow to remain below potential, with evident adverse impacts on inflation.