Swedish Economy Shows Signs of Recovery Amid Domestic Demand Shift

Recent reports indicate a cautiously optimistic outlook for Sweden's economy as signs of recovery gain momentum. Finance Minister Elisabeth Svantesson highlighted improved economic sentiment during a November 12 press conference, citing data from Statistics Sweden (SCB) that show better moods among businesses and households. She noted, "Swedish households have a more positive attitude and future outlook on the economy. People see the light at the end of the tunnel." Although she emphasized the economy is not yet strong, Svantesson acknowledged that recent months have seen better-than-expected economic performance, with consumer spending rising noticeably.

The recession in Sweden originated from high inflation and interest rates, compounded by uncertainties from US tariffs under former President Trump, which had made consumers cautious. However, the current recovery appears bolstered by a shift in growth drivers: domestic demand is overtaking export reliance as the main engine for economic expansion. Trade union Unionen forecasts a 2.7% GDP growth next year, reflecting this momentum. Notably, service sector unions have expressed greater optimism than industrial unions for the first time in three years, signaling improving confidence across sectors.

Despite positive developments, Svantesson warned that risks remain, particularly due to Germany's weak economic performance, a crucial trading partner for Sweden. These factors warrant vigilance, even as hope grows that Sweden's economy is moving past its recessionary phase.