The Swedish economy is currently in a prolonged recession, characterized by high inflation and uncertainty regarding future economic developments, which continue to restrain both consumption and investments. Geopolitical and uncertainties regarding the trade policy in the global environment are also expected to hamper the pace of recovery. Labor market demand remains weak, and unemployment levels are high.
Inflation in Sweden has remained elevated in the early part of the year, and the Riksbank anticipates that it will exceed the target slightly during 2025. Inflation is expected to stabilize around the target level in 2026. While household sentiment was strong at the end of 2024, confidence has since declined, and expectations have become less optimistic. The Riksbank has gradually eased Swedish monetary policy. The interest rate cuts have had a positive impact on the Swedish economy, although their full effects have yet to materialize.
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