HELSINKI, March 11 (Xinhua) -- The Swedish government on Wednesday lowered its forecast for annual economic growth this year to 2.8 percent from 3.0 percent.

Speaking at a press conference in Stockholm, Finance Minister Elisabeth Svantesson said the adjustment was based on the assumption that the current conflict in the Middle East would last only a few weeks. "If the war continues longer, then we have a serious situation," she said.

According to the update, the economy was forecast to grow by 2.5 percent in 2027. Inflation in 2026 is expected to reach 1.2 percent, slightly up from an earlier estimate of 1.1 percent. For 2027, inflation is projected at 1.6 percent, compared with the previous forecast of 1.8 percent.

Addressing concerns about private household spending, Svantesson said the government is negotiating with the allied party, the Sweden Democrats, on additional measures to help households cope with higher fuel and electricity costs. Details are expected to be announced in a supplementary budget in April.

Though she declined to say how much the government might spend on such measures, Svantesson stressed that Sweden's public finances are "world-class" and strong enough to cope with the situation.

Under earlier decisions, the value-added tax (VAT) on food will be temporarily reduced from 12 percent to 6 percent from April until the end of 2027. The cut will apply only to food sold in stores, not to restaurant meals.

Sweden's gross domestic product grew 1.5 percent in 2025, according to data released earlier by Statistics Sweden. ■