Swedish Economy Shows Clear Signs of Recovery With Growth Forecasts Improving

The Swedish economy is demonstrating clear signs of recovery after a sluggish start to 2025, according to newly released economic forecasts presented by Finance Minister Elisabeth Svantesson. Despite a slight decline in October’s GDP indicator compared to the previous month, the annual GDP growth rate has reached 2.1%, marking a stronger performance than earlier expected.

This recovery is primarily driven by domestic demand. Rising incomes and pent-up consumption are spurring household spending, which alongside increased public investments, is fueling economic activity. The government anticipates that business investments will also accelerate following several years of weaker growth.

Unemployment remains high but is projected to decline starting early 2026 as labor demand increases in tandem with accelerating economic activity. Svantesson emphasized the government's role in supporting this recovery, stating, “Now the recovery in the Swedish economy is underway. By ensuring that everyone has more money in their pockets, while also making investments in public consumption and infrastructure, fiscal policy supports the recovery, and the recession is projected to be over by 2027.”

On the global front, the economy is performing better than expected despite uncertainties. The impact of U.S. import tariffs has been less severe than feared, yet trade policy uncertainties remain elevated and are expected to have lingering effects.

These updated projections reflect a broader and more robust recovery than previously forecast, with the government optimistic that the recession will conclude by 2027 if current trends continue. Household consumption, public investment, and improving business sentiment underpin this positive outlook for the Swedish economy in the near term.