Stockholm Economy Strengthens in Late 2025 Amid Rising Household Spending

The Stockholm region's economy displayed a notable recovery in the fourth quarter of 2025 after a sluggish start to the year, signaling a strong finish for the year. According to the latest Stockholmsbarometern from the Stockholm Chamber of Commerce, the economic sentiment index rose by 2.9 points to reach 106.2, indicating economic conditions above the historical average.

The business sector closed the year positively with an increase of 3.2 points to 107.7, mainly propelled by stronger demand and greater optimism in private services and manufacturing. However, retail experienced a downturn, which was anticipated following the holiday shopping season. The construction sector partially rebounded, returning close to its normal state, although 90% of construction firms still reported insufficient demand as a constraint.

Households in Stockholm exhibited increased confidence, beginning to plan for significant purchases after a prolonged period of caution. Despite this uptick in optimism, consumers remain somewhat cautious about their personal financial situation amid external uncertainties. This cautious but improving sentiment is seen as a positive indicator for ongoing economic growth.

On a broader scale, the Swedish economy is also on an upward trajectory. SBAB's recent forecast projects GDP growth of 2.8% in 2026 and 2.5% in 2027, driven by increased household consumption and higher business investments. Inflation is expected to stay below target levels for these years. The improving household financial conditions are additionally expected to support a rise in housing prices by approximately 4.7% in 2026 and 4.3% in 2027, although housing construction continues to face challenges due to elevated building costs.

Robert Boije, chief economist at SBAB, highlights these housing sector difficulties, noting that despite growth in the economy, the supply side constraints in housing remain a concern. Carl Bergkvist, chief economist at Stockholm Chamber of Commerce, commented on the retail sector's expected post-holiday slowdown and considered the construction sector’s gradual return to normalcy.

Overall, Stockholm's economy is exhibiting resilience and recovery with expanding sectors and more optimistic households contributing to the positive outlook, though challenges such as demand limitations in construction and cautious consumer finances remain. January 2026 was turbulent, and its impact will be reflected in future economic reports.