STOCKHOLM - The Swedish economy is now expected to contract next year by 0.4%, and there is significant risk that the outcome could be even weaker, the country's recently appointed finance minister said on Monday.

The previous government had in August predicted growth of 0.4% in 2023.

The finance ministry also raised its outlook for inflation, forecasting consumer price rises at fixed rates of 7.9% this year and 5.2% next year, up from the August projection by the previous government of 7.3% and 3.9%.

"The forecast for the Swedish economy is gloomy and there is significant risk that developments will be even weaker than the main scenario," Finance Minister Elisabeth Svantesson said in a statement.

"It's important that Swedish fiscal policy is well balanced both in relation to the need for bringing down inflation and to be able to manage the economic downturn," she added.

(Reporting by Anna Ringstrom and Niklas Pollard in Stockholm, and Terje Solsvik in Oslo, editing by Gwladys Fouche and Stine Jacobsen)