Optimistic Economic Outlook for Sweden in 2026 Amid Government Reforms and Growth Forecasts

Sweden's economic prospects for 2026 are looking brighter, driven by positive forecasts from Danske Bank and government budget reforms expected to impact household economies. Danske Bank’s Nordic Outlook projects 2.6% economic growth next year, buoyed by increased household optimism, a recovering domestic economy, and a strengthening labor market where short-term unemployment is at its lowest in two years. The housing market is also expected to perform well, with housing prices forecasted to rise by 5% annually.

Inflation is projected to average 1.6% in 2026, reduced from above-target levels in 2025, thanks in part to political reforms such as the reduction of food VAT, which have helped ease price pressures. Danske Bank anticipates that the Riksbank will begin raising interest rates by year-end 2026, reaching 2% by December and possibly 2.25% in early 2027.

From a household perspective, the government's 2026 budget reforms will benefit higher-income earners more, particularly men, due to generally higher incomes compared to women. However, low-income families with children stand to gain the most through increased housing allowances. Mattias Bågling of Statistics Sweden (SCB) emphasized that men are the primary beneficiaries because of income disparities, while social work expert Tapio Salonen expressed doubts about whether the reforms sufficiently support the most vulnerable groups.

These developments collectively suggest a stabilizing and stronger economic environment for Sweden in 2026, though concerns about social equity remain.