Swedish economic recovery under way

Following the recession, the Swedish economy is now considered to be in a recovery phase, and the economic situation is expected to further improve in 2025. In the fourth quarter of 2024, GDP increased by 0.8 per cent and both investment and household consumption rose significantly. The prospects for continued recovery are good. Real wage growth, lower interest costs and accommodative fiscal policy are expected to lay the foundations for increased private consumption. At the same time, uncertainty related to geopolitics and trade policy impacts economic activity both in Sweden and internationally. This is expected to dampen the recovery as businesses postpone investment and recruitment plans, and households defer certain consumption. Growth of Swedish exports is also expected to be subdued in 2025.

“The economic recovery has begun. 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,” says Minister for Finance Elisabeth Svantesson.

Demand for labour remains weak and unemployment is high. However, certain labour market indicators have improved somewhat. Recovery in the labour 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 projected to stabilise near the 2026 target.