The National Institute of Economic Research believes that international trade conflicts and the uncertainty surrounding Brexit are weighing on the global economy, and that this is affecting Swedish exports.
It also warns that unemployment will continue to rise despite a "mildly expansionary" fiscal policy.
Inflation is also expected to remain significantly lower than 2 per cent and no interest rate hikes from the Riksbank are expected neither this year nor next year.
Households' view of the Swedish economy and expectations of the future are also bleak, KI writes. At the same time, confidence indicators for both manufacturing and service industries have fallen and are now lower than normal.