Stockholm, Oct 26 (IANS): High inflation and interest rate hikes will affect many Swedish households and slow down the country's economic growth next year, a leading bank said in a report.

Sweden's gross domestic product (GDP) growth is expected to be minus 1.1 per cent next year, said Mattias Persson, Swedbank's chief economist and global head of macro research, in an interview with Swedish Television (SVT), Xinhua news agency reported.

The Swedish central bank's policy rate is expected to increase from the present 1.75 per cent to 3 per cent by February, according to Swedbank's latest economic outlook.

It expects inflation and unemployment rate to reach 7.4 per cent and 7.6 per cent respectively in 2023.

In consequence, Swedish households are expected to spend a higher proportion of their disposable income on mortgages since the 1990s, a situation which Persson said would have a wider effect on the Swedish economy.

"The labor market still shows resilience, but the situation is expected to worsen when employment-intensive industries such as retail and construction are affected," Persson told SVT.