Swedbank’s chief economist predicts that the Swedish economy will pick up pace next year and become robust in 2026 after tight monetary policies have been holding back growth in Sweden. The outcome of the US election increases uncertainty, while growth prospects are dampened due to higher tariffs.
“Consumption remains weak, and there is no sign of a turnaround yet. However, we believe that households will start consuming more next year as incomes continue to rise faster than prices, while interest rates fall further. At the same time, savings will remain at a high level,” says Mattias Persson.
The chief economist estimates that unemployment will peak at 8.7% and that the labor market will begin to turn cautiously in the first half of 2025. A more significant improvement depends on further interest rate cuts from the Riksbank, according to Persson.
Continued interest rate cuts
“Monetary policy remains tight in Sweden, and we expect the Riksbank to continue lowering the policy rate at the upcoming meeting in December by 0.25 percentage points. In 2025, the cuts will continue down to 1.75%.”
Mortgage rates are expected to remain at a higher level than before the interest rate hike in 2022, while property prices are projected to increase by 5% in 2025 and 6-7% in 2026.
The Swedish economy is forecasted to grow weakly in 2024, with a modest growth of 0.6%, according to Swedbank’s new forecast. GDP is expected to grow by over % in 2025 and just under 3% in 2026.
“The outcome of the US election increases uncertainty, and we have slightly revised down the growth prospects for 2026,” says Mattias Persson.