Swedish Economy on a Strong Growth Path in 2026 Fueled by Robust Consumption and Currency Strength

The Swedish economy is projected to see significant growth in 2026, driven by increased household consumption, business investment, and a notably stronger Swedish krona.

According to a recent forecast by SBAB, GDP growth is expected to reach 2.8% this year, followed by 2.5% in 2027. This upward revision from earlier estimates is largely attributed to rising household consumption and business sector investments. Inflation is forecasted to remain below target levels for both years, providing a stable environment for economic expansion.

Simultaneously, the Swedish krona has strengthened considerably, trading at approximately 8.92 krona per US dollar, up 21% since early 2025. This appreciation is due to various factors including global capital flows moving away from the US, a weakening dollar, and improved interest rates in Sweden. This currency strength has not only boosted Sweden’s external economic position but also influenced investment behavior. According to SEB strategist Amanda Sundström, the krona’s resilience is supported by positive growth prospects and healthy public finances.

Handelsbanken’s Tommy von Brömsen attributes the shift partly to political uncertainties in the US under Donald Trump’s administration, which have undermined confidence in American financial management. Consequently, investors have been reallocating funds from US assets to Swedish and European alternatives.

The Swedish government’s plans to increase borrowing to finance military upgrades are also expected to make Swedish bonds more attractive, further supporting the currency and investment environment.

However, experts advise caution, noting the potential for volatility due to interest rate changes and other external factors. Also, a strong krona could reduce returns for funds heavily invested in foreign equities when converted back to krona.

Overall, the combined effect of strong domestic consumption, investment activity, and currency appreciation paints a positive picture for the Swedish economy in 2026, with promising prospects for growth and financial stability.