Stockholm, Sweden – In a press briefing on March 19, 2025, Minister for Finance Elisabeth Svantesson announced that the Swedish economy is in recovery mode, with growth expected to continue this year. However, high levels of uncertainty due to geopolitical tensions and trade policies are projected to dampen growth in the near future.
According to the Ministry of Finance's latest forecast, the Swedish economy entered a recovery phase in the second half of 2024, driven by increased GDP, investment, and household consumption. The fourth quarter of 2024 saw GDP rise by 0.8 per cent, with both investment and household consumption showing significant growth.
The prospects for continued recovery are good, thanks to real wage growth, lower interest costs, and accommodative fiscal policy, which will lay the foundations for increased private consumption. However, uncertainty related to geopolitics and trade policies is expected to impact economic activity both in Sweden and internationally, leading businesses to postpone investment and recruitment plans, and households to defer certain consumption.
"The economic recovery has begun," said Minister Svantesson. "Swedish GDP is still below trend, but we are seeing clear signs of continued growth and we are in a fiscally strong position. Sweden has a stable economic foundation which provides good prospects for a continued recovery in 2025 and 2026."
While demand for labor remains weak, with high unemployment rates, certain labor market indicators have improved somewhat. Recovery in the labor market is expected to begin in 2025 and continue in 2026, with increasing employment and decreasing unemployment.
Inflation, as measured by the Consumer Price Index with fixed interest rate (CPIF), has been at elevated levels in the beginning of 2025 and is projected to be slightly higher than the target level in 2025. However, inflation is expected to stabilize near the 2026 target.
Key indicators of the Swedish economy include:
GDP growth: 0.8% in the fourth quarter of 2024
Investment growth: significant increase
Household consumption growth: significant increase
Labor market:
+ Unemployment rate: high, but improving
+ Employment rates: increasing
+ Inflation (CPIF): elevated levels expected in 2025, stabilization by 2026
In conclusion, while the Swedish economy is in recovery mode, uncertainty related to geopolitics and trade policies will likely dampen growth in the near future. However, with a stable economic foundation, Sweden has good prospects for continued growth and recovery in 2025 and 2026.