- Real GDP is expected to pick up to 1.9 percent in 2025 and further in 2026 to 2.2 percent. Inflation is expected to remain anchored around the 2 percent target.
- With inflation successfully brought under control, adopting a more supportive macroeconomic monetary and fiscal policy mix and the focus on productivity are appropriate.
- Sweden's economy remains robust and resilient and is well positioned to face a more challenging environment.
Washington DC: On March 31, 2025, the Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Sweden. [1]
After contracting in 2023, economic activity started to recover in 2024 (1 percent), and growth is expected to pick up in 2025 to 1.9 percent, and further to 2.2 percent in 2026 on the back of policy support and converge to potential GDP growth (1½–1¾ percent) over the medium-term. Inflation has been successfully brought under control and is expected to remain anchored around the 2 percent target over the forecast horizon. The financial system is sound, and buffers are robust, but vulnerabilities persist. The balance of risks to the growth outlook is tilted to the downside—including from geoeconomic fragmentation, trade uncertainty and escalating protectionism, and or weakness in private consumption, while risks to inflation are double-sided. Downside risks to financial stability have subsided somewhat. Monetary policy has reached a neutral stance while fiscal policy is projected to be moderately expansionary amid subdued levels of private domestic demand and a still-negative output gap.
High uncertainty and a more challenging external backdrop are poised to test Sweden's export-oriented economy, while slowing productivity growth and an aging population weigh on long-term growth. Sweden's fundamental macroeconomic and institutional strengths—solid policy frameworks, a well-functioning financial system, robust fiscal accounts, large external buffers, a comprehensive safety net, highly skilled labor, exceptional strong innovation capacity, and a strong track record of sound policy implementation—position it well to navigate these challenges.
Executive Board Assessment [2]
Directors welcomed Sweden's economic recovery and resilience, underpinned by solid fundamentals. While noting the downside risks to the outlook, Directors agreed that Sweden is well positioned to navigate challenges posed by geoeconomic fragmentation, trade policy uncertainty, and aging, given its solid policy frameworks and substantial buffers. In that context, Directors welcomed a more supportive policy mix and emphasized the need for reforms to boost productivity growth.
Directors agreed that the moderately expansionary fiscal stance envisioned in the 2025 budget is appropriate. They noted that substantial available fiscal space allows for targeted policy support should downside risks materialize. Directors also emphasized that fiscal policy should prioritize measures to enhance growth and resilience, facilitate the green transition, and further enhance inclusion. Noting the rising fiscal pressures related to aging, climate change, and defense, Directors also recommended broadening the coverage of the fiscal sustainability report to support policy formulation.
Directors commended Riksbank's effective and clearly communicated monetary policy response with price pressures broadly under control. They agreed that the current neutral monetary policy stance remains appropriate and recommended that monetary policy should remain agile and data dependent, given the high uncertainty and double‑sided risks to inflation.
Directors stressed that the financial system is resilient. They encouraged the authorities to remain vigilant and further strengthen their regulatory and supervisory frameworks, given elevated systemic risks from high household debt and large bank exposures to commercial real estate. Directors concurred that the current macroprudential policy settings are appropriate and recommended maintaining Borrower‑Based‑Measures to preserve macro‑financial resilience. They also encouraged reforms in housing, rental markets, and tax policy to address housing affordability challenges. Directors commended the progress on implementing the 2023 FSAP recommendations and encouraged continued efforts to strengthen systemic risk assessment and analysis.
Directors welcomed the authorities' focus on raising labor productivity, which remains higher than European peers. They encouraged adoption of reforms to simplify regulations, enhance education outcomes, support labor mobility, and further deepen Research and Development. Measures to strengthen the EU single market and further efforts to achieve Sweden's ambitious climate agenda are also important.
Table 1. Sweden: Selected Economic Indicators |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/Sweden page.
[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .
