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The economy is still growing strongly, underpinned by solid demand, labour force expansion, rising productivity and a brightening international outlook. However, shortages of qualified labour and constructible land are slowing residential investment. The decline in the unemployment rate is levelling off as difficult-to-hire low-skilled workers make up a rising share of jobseekers. A three-year wage agreement with modest wage increases should restrain inflationary pressures and, together with persistently high household saving, hold back consumption.
Highly expansionary monetary policy in response to persistently below-target inflation continues to fuel a housing boom, despite a damping effect from macro-prudential policies. Easing planning and rental regulations and reforming housing taxation would help stabilise house prices, increase labour market mobility and improve equality. Investment in skills and integrating humanitarian migrants in the labour market, notably women, are rightly accommodated within a prudent fiscal policy.
Sweden benefits substantially from its deep integration in global value chains, while policies mitigate external shocks and support the adaptation of workers through training, counselling and temporary income support. The gains from globalisation are shared through extensive public services and redistribution. However, international competitiveness concerns hold back collectively bargained wage growth and constrain monetary policy.
Economic Survey of Sweden (survey page)