Sweden

The Swedish economy recovered quickly from the effects of the pandemic, with GDP exceeding pre-crisis levels by almost 5% by the end of 2021. Strong domestic demand and robust private investment drove growth in 2022. But the economy stagnated in 2023 as consumption fell sharply due to rising mortgage costs and inflationary pressures, leading to unemployment rising to 7.7% in 2023. Due to the typical delay in labor market responses to broader economic trends, unemployment increased to 8.4% in 2024 and accelerated further to 8.7% in 2025. As economic conditions gradually improve, the unemployment rate is expected to fall to 8.4% in 2026 and 7.8% by the end of 2027. Growth is expected to remain high over the next few years. Household income is increasing rapidly, and fixed investment has also increased and is expected to remain high due to investment in machinery and equipment, defense and construction. Fiscal policy is expansionary, with interest rates lowered by 25bp to 1.75% in Q3 2025, and trade uncertainty is easing, which contributes to higher net exports. Furthermore, the government has announced an expansionary budget for 2026, comprising measures which could boost growth by +0.3pp over the next two years. This has lifted sentiment, supporting consumption and household purchasing power is set to improve further. Although insolvencies rose by +22% from low levels in 2024, they dropped again in 2025 by -0.1% and are expected to drop further by -0.9% over the next two years. Overall, the Swedish economy is expected to grow by +2.7% in 2026 and +2.5% in 2027.  

Inflationary pressures remain modest, with wage growth declining from 4% last year to likely to reach around 3.5% over the next two years. Despite this slowdown, however, wage growth remains above pre-pandemic levels, contributing to higher inflation, particularly in the services sector. Overall inflation remained low throughout 2025, but global developments caused food and other goods prices to rise in early 2025. Food prices are expected to be affected by further supply shocks in the near term but should stabilize early next year. Other goods should also stabilize in a more stable global trade environment with a steady SEK exchange rate. As the effects of the basket of goods subside towards the end of 2025, inflation fell to +0.3%. Consequently, the overall inflation rate for 2025 is estimated at +0.7%, with a slight acceleration to +1.2% in 2026, reaching the target level of +2% by 2027. 

Sweden boasts one of the world's best business environments. The country is recognized for its innovation, strong R&D performance and vibrant start-up scene. The country is a global leader in green technology and circular economy models. This favorable business climate is supported by a highly skilled workforce, robust infrastructure and a strong appeal to foreign investors.