Sweden's centre-right government on Saturday delivered a gloomy message to voters ahead of a September 14 general election, cutting its growth forecast due to lingering weakness in the global economy and saying it will raise taxes further if re-elected. Sweden's economy contracted slightly in the first quarter and barely grew in the April-June period as its key export sector was hurt by sluggish overseas demand, particularly from Europe.
The euro zone has stalled and recovery there could be further hampered by sanctions against Russia imposed in July over its involvement in the Ukraine crisis. "A weak development internationally will mean a somewhat slower recovery in Sweden," Finance Minister Anders Borg said. "That, along with increased expenditure at the end of the next term of government, means that we must strengthen the budget," he added. Borg cut his forecast for growth this year to 1.9 percent against a forecast in July of 2.5 percent. Growth next year is seen at 3.0 percent versus a previous forecast of 3.1 percent.