2025-12-19
Swedish Economy Report
Swedish Economy Report December 2025
Demand in the economy grew broadly in the third quarter. The recovery will continue over the coming quarters, and the recession will come to an end in the second half of 2026. Key drivers of the recovery include rising real wages and expansionary economic policy.
Tax cuts targeted at households and extensive debt-financed investments in defence, together with earlier interest rate reductions, will boost domestic demand in 2026. In addition, exports will continue to make a significant contribution to growth. CPIF inflation will continue to fall in 2026 and will be clearly below 2 per cent, even disregarding the direct effects of the reduced VAT on food. To prevent inflation from rising too sharply in 2027, the Riksbank will make its first policy rate hike at the end of 2026. The turnaround in the labour market will take slightly long-er. Unemployment will begin to fall in 2026 but will not return to its equilibrium level of around 7 per cent until the end of 2027.
