Swedish Economy Report September 2024

The Swedish economy will weaken further this year, largely because households have chosen to save more and not spend more in response to high inflation and high interest rates.

A tentative recovery will begin towards the end of the year, but the output gap will remain negative for longer than anticipated in our June forecast. Low inflation and falling interest rates mean that consumer spending will begin to grow more quickly next year. Lower interest rates will also help investment to pick up after falling both this year and last. The turnaround in the economy means that unemployment will fall over the course of next year. Our forecast assumes that the Riksbank gradually lowers the policy rate to 1.75 per cent next summer. The budget bill for 2025 entails a decline in general government net lending next year to –0.6 per cent of GDP. We estimate fiscal space of SEK 106 billion in the period 2026–2028, or around SEK 35 billion per year, which is about the size of an average budget bill.