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Strong exports, reflecting both growth among Sweden’s main trading partners and a weaker krona, along with solid domestic demand, will continue to support the expansion. Housing investment will keep declining, following earlier house price falls. Employment creation will slow, with labour shortages in a number of occupations. The unemployment rate will level off as difficult-to-hire workers make up a rising proportion of jobseekers.
Fiscal and monetary policies are expansionary. Inflation is roughly on target, partially due to transitory factors. The Riksbank has signalled its intention to start raising interest rates around the turn of the year, which would be appropriate to balance inflation undershooting risks and capital misallocation risks. Housing market, immigrant integration and education reforms are needed to foster inclusive growth.
Source: OECD Economic Outlook 104 database; and Mäklarstatistik.
Economic Survey of Sweden (survey page)