Sweden's economy shrank 0.2% in 2023 versus the previous year, hit by inflation and higher interest rates, data from the Statistics Office showed on Thursday.

In the fourth quarter, the economy shrank 0.2% versus the same period in 2022 and fell 0.1% from the previous three months.

Preliminary data had shown GDP expanding 0.1% quarter on quarter and unchanged from the same period in 2022.

On a quarterly basis, the biggest impact was from falling investment and rising services imports, the Statistics Office said, adding household consumption rose.

Surging inflation and higher interest rates have hit growth - particularly investment in home building - but a strong labour market and robust exports have meant the downturn has been relatively mild.

The pace of inflation has dropped significantly after peaking at over 10%, but the central bank is not expected to start cutting interest rates until mid-year - or later.

Many analysts expect growth in 2024 to remain sluggish at best. (Reporting by Simon Johnson, editing by Stine Jacobsen)