Sweden

Sweden - Economic forecast summary (November 2017)

 

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Low interest rates, a brightening global outlook and rapidly growing public spending are fuelling a booming economy. Growth is expected to remain solid over the coming years, albeit slowing somewhat as capacity constraints bite. The unemployment rate is levelling off as difficult-to-hire low-skilled workers make up a rising share of jobseekers. A lack of constructible land and pronounced labour shortages in the construction sector will slow residential investment.

Both fiscal and monetary policies are expansionary during a strong upturn. The ongoing investments in skills, the welfare system and humanitarian migrants’ integration, notably women, are necessary and the fiscal position is strong, with a budget surplus and low public debt. Nevertheless, spending increases risk amplifying the business cycle. Expansionary monetary policy has succeeded in bringing inflation close to 2% and expectations are well-anchored. The central bank is projected to begin withdrawing monetary stimulus in 2018, which will help contain the rise in household debt.

Easy financing conditions continue to fuel a credit-driven housing boom, despite a damping effect from macro-prudential policy. Easing planning and rental regulations and reforming housing taxation would help stabilise house prices, increase labour market mobility and improve equality. 

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Other information

Economic Survey of Sweden (survey page)

 

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