Sweden fell into a recession in the third quarter as its economy contracted by 0.3 percent and consumers tightened their belts for a fifth straight quarter, Statistics Sweden said Wednesday.

The Scandinavian country is one of the worst economic performers in the European Union, with the European Commission forecasting average growth of 0.6 percent in the EU in 2023.

Sweden’s economy shrank by 0.8 percent in the second quarter. A recession is usually defined as two consecutive quarters of contraction.

“The downturn is mainly explained by a decrease in inventories and reduced household consumption,” the statistics agency said in a statement.

Household consumption shrank by 0.6 percent in the third quarter from the second, while decreased industrial inventories contributed a negative 1.4 percentage points to the economy’s performance.

The country has been struggling with stubbornly high inflation for more than a year as well as a depreciating krona — prompting the central bank to successively raise its key rate to four percent, its highest level in 15 years.

Consumers have been hard hit by the higher prices and interest rates, with many households having mortgages with variable interest rates.

“Household consumption was much weaker than expected and posted a negative contribution to GDP for the fifth consecutive quarter, which is in line with the previous longest decline from 1992-93,” Swedish bank Swedbank said in an analyst note.

Exports were however up by a solid 1.4 percent from the previous quarter, with net exports contributing positively to GDP by 1.5 percentage points.

Compared with the third quarter of 2022, the economy shrank by 1.4 percent, Statistics Sweden said.

“Overall … the outcome confirms a weak development in the Swedish economy,” Swedbank said.

The government recently expressed concern over the country’s “prolonged economic winter”, as unemployment rose to 7.7 percent in the third quarter.

The government forecasts a contraction of 0.8 percent for 2023 as a whole.

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