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Economy and Finance

Economic forecast for Sweden

The latest macroeconomic forecast for Sweden. 

Indicators 2023 2024 2025
GDP growth (%. yoy) -0.1 0.2 1.6
Inflation (%. yoy) 5.9 1.7 1.9

In 2023, the Swedish economy is estimated to have contracted by 0.1%, mainly due to lower private consumption and housing construction. Nominal wage growth below inflation, coupled with high household indebtedness and increased interest rate expenses, eroded real disposable incomes. A sharp drop in housing investment also contributed to the contraction in domestic demand. Exports, especially of services, supported the economy, reflecting strong competitiveness.

Economic growth is projected to remain sluggish at the beginning of 2024 and to pick up in the second half of the year. This is set to be primarily driven by an assumed bottoming out of household consumption, as the combination of falling inflation and lower interest rates supports households’ purchasing power. The drag from gross fixed capital formation is expected to fade out as the decline in housing construction moderates, while business investment is set to remain resilient. Net exports are expected to moderate, reflecting the recovery in domestic demand. Overall, real GDP growth is projected to reach a modest 0.2% in 2024, revised up from the Autumn Forecast.

Moderate inflation, good corporate margins, and a relatively resilient labour market are projected to support economic growth in 2025. Falling interest rates should support investment. However, the strength of the upswing in the economy is set to be limited by weak residential construction and the gradual adjustment of household balance sheets and spending to changes in financial conditions. All in all, real GDP growth is forecast to reach 1.6% in 2025, revised up compared to autumn.

HICP inflation fell rapidly during 2023 as base effects and the easing of supply bottlenecks outweighed the lagged pass-through of the weaker effective exchange rate. Energy prices for households and corporates are expected to decline sharply in the first part of 2024, mirroring lower global energy prices, changes in energy taxation and lower requirements for the blending of biofuels in petrol and diesel. Domestic wage and price pressures are set to remain contained over the forecast horizon. Inflation excluding energy, however, is set to recede relatively slowly in view of persistent price increases for certain services such as for hotels and restaurants. With fairly anchored inflation expectations and the cyclical weakness in demand, consumer price increases are expected to remain limited. Overall, HICP inflation is forecast at 1.7% in 2024, broadly unchanged from autumn. Inflation is set to reach 1.9 % in 2025, less than expected in the Autumn Forecast.