Restrained households delay the recovery

The Swedish recession continues to deepen, with an upward turn not expected until the second quarter of 2025. The recession persists even into 2026. The downturn has resulted in increased unemployment, which is forecasted to remain at current levels
throughout 2025.

Weak economic growth in the Eurozone during 2025 is restraining Swedish export growth. A significant factor behind the sluggish growth is that Swedish households continue to be cautious regarding their consumption. Recent years' rapid price increases and interest rate hikes have eroded household real disposable incomes. Inflation has been slightly below 2 percent for some time, and in our forecast the Riksbank will gradually lower the policy rate to 1.50 percent by June 2025. Lower interest rates are expected to stimulate both corporate investments and household consumption. However, by the end of 2025, resource utilization in the economy remains well below normal, and unemployment persists at an elevated level.