Sweden’s Economic Outlook Brightens Amid Global Uncertainty with Growth Forecasts Revised Upwards

Sweden is witnessing a cautiously optimistic economic forecast for 2026, with SEB raising its growth outlook despite ongoing global uncertainty. SEB’s chief economist, Daniel Bergvall, highlighted that Sweden’s economy has shown distinct signs of strengthening even before the impact of last year’s fiscal measures has fully materialized. The bank now projects a GDP growth rate of 3.0% for 2026 and 2.9% for 2027, fueled by a robust labor market and rising real wages.

Inflation is also expected to ease significantly, with projections indicating a decrease to 1.1% by the end of 2026 based on the KPIF measure excluding energy prices. SEB further anticipates the Riksbank will hold its interest rate steady until late 2027, with the first rate increase not expected until then.

Meanwhile, Swedish Finance Minister Elisabeth Svantesson expressed confidence in the nation's economic resilience, declaring it "Trumpsäkrad" (Trump-proof) in response to US tariff threats. With strong public finances behind it, Sweden aims to counteract external pressures effectively. Crucial reforms introduced in 2026—including lowered food VAT and a new job tax deduction—are intended to increase disposable incomes, stimulate consumption, and boost business investments.

However, some reservations remain regarding the domestic consumption outlook. Financial expert Michael Grahn of Danske Bank warned that consumers might prioritize saving over spending due to lingering economic caution from previous years. Grahn also suggested that the Riksbank could potentially need to consider cutting interest rates twice before year-end to sustain economic momentum.

While government optimism prevails, the global economic environment continues to pose risks to Sweden’s recovery, and the anticipated consumption-led growth may face challenges if households remain hesitant.

In summary, Sweden's economic forecasts for 2026 have improved with higher expected growth and easing inflation, supported by fiscal reforms and a strong labor market, yet global uncertainties and cautious consumer behavior temper the outlook. The Riksbank’s monetary policy stance remains watchful with steady interest rates expected until late 2027.