Swedish Economy Poised for Recovery in 2026 Despite Global Risks

The Swedish economy is expected to enter a recovery phase in 2026, with major banks and economists forecasting notable growth amid ongoing global uncertainties. Despite challenges such as new U.S. tariff threats and tensions involving Greenland, analysts remain optimistic about Sweden’s economic trajectory.

Leading banks including Nordea, Swedbank, Handelsbanken, and DNB Carnegie have collectively projected growth, with GDP expected to rise by up to 3 percent this year. Nordea’s chief economist Annika Winsth highlighted the positive outlook, stating, "Looking at Sweden, it looks really good," while also acknowledging the increased risks tied to U.S. tariff policies and international trade tensions.

Swedbank’s Economic Outlook report outlines similar optimism, forecasting a 2.6 percent growth for 2026 and 2.2 percent in 2027, driven primarily by increased household consumption and investments. Rising household disposable income—bolstered by lower inflation, tax cuts, and higher wages—is expected to increase purchasing power by nearly 3 percent, fueling consumption. This, combined with expansionary fiscal policies, including investments in defense and infrastructure, supports the growth forecast.

Unemployment is projected to decline to 7.8 percent by the end of 2027 as economic conditions improve. Although the housing market has been subdued, prices are anticipated to gradually rise by approximately 4 percent by 2027, reflecting better household finances. The Swedish central bank, Riksbanken, is expected to maintain current interest rates until September 2027, focusing on inflation control without immediate hikes.

Experts point out the risk of economic overheating as expansive policies align with a more active consumer base. There is also some disconnect between public perception and economic realities; Winsth noted that the Swedish economy performed better in the previous year than many households realize.

While global trade uncertainties cast a shadow, the consensus among Sweden’s top economists and banks is that the nation’s economy will withstand external shocks and proceed toward a robust recovery this year.