Diplomat Foreign Desk
Stockholm:DD, Growth of the Swedish economy has been burdened by geopolitical uncertainty during the first half of 2025, and we are still in a period of recession.
At the same time, recovery is expected to resume in the coming months and continue at a steady pace next year. Minister for Finance Elisabeth Svantesson has presented a new forecast on the economic outlook.
Elisabeth Svantesson, Minister for Finance in front of a Swedish flag and EU-flags
Elisabeth Svantesson, Minister for Finance at the press briefing.
Photo: Viktor Thörnblad Svensson/Government Offices
Sweden’s economic recovery began in late 2024 but was interrupted in early 2025 when the US administration announced high tariffs against the EU and the rest of the world. During the first half of 2025, the economic outlook here and in the rest of the world has been characterised by uncertainty, which has stymied growth.
The tariff agreements signed over the past few months are expected to reduce the risk of an escalated trade conflict, which is positive for growth both in Sweden and among its neighbours. Swedish households have begun to show optimism after a period of low expectations. Going forward, increased domestic demand is seen as particularly vital for Sweden’s recovery.
The prospects for recovery are good. From the second half of 2025, real wage growth, lower interest expenditure and an accommodative fiscal policy are expected to contribute to steady growth in household consumption. In 2026, domestic demand is expected to increase further, thanks in part to an accommodative fiscal policy.
At the same time however, growth among Sweden’s key trade partners is expected to be subdued, which means that Swedish export growth is likely to slow down. Overall, growth is expected to be higher next year, and in 2027 the Swedish economy is predicted to be essentially in balance.
The employment rate in Sweden increased during the first half of 2025, although unemployment remains high. The labour market recovery is expected to be slightly delayed, and employment is forecast to rise at a faster rate in 2026.
“Many people are worried about global events and that is slowing down the Swedish economy. But Sweden has good fundamental economic prospects, with strong public finances, high productivity and innovative companies. To get the economy moving, it is important that everyone in Sweden can begin to believe in the future and feel optimistic again,” says Ms Svantesson. (Ministry of Finance, Sweden)
