Healthy output growth is set to continue, reaching 3.4% in 2016, with further expansion of employment and gradually declining unemployment. Recent wage settlements will lead to only moderate increases in household income, and private consumption will grow somewhat more slowly than output. Inflationary pressures are projected to remain subdued. Business investment will increase further, and high housing demand will continue to support residential investment.
Buoyant cyclical conditions argue for a broadly neutral fiscal stance, but monetary policy should remain expansionary until inflation is clearly moving towards target. To contain financial risks, an amortisation requirement for new mortgages will enter into force in June and the countercyclical capital buffer will be raised in 2017. Easing planning and rental regulations and phasing out mortgage interest deductibility would help contain the rise in housing demand and household debt, which may prove destabilising if unchecked.
After flatlining since 2006, productivity has picked up lately. Sweden's knowledge-based economy and highly skilled workers make for high productivity, strong integration in the high-value parts of global value chains, and inclusive growth. However, falling school results and comparatively low skills among immigrants pose challenges.
>> Productivity country profile for Sweden
Economic Survey of Sweden (survey page)
The Economic Consequences of Brexit: A Taxing Decision (main web page with paper)
Structural reforms in a difficult time (blog + paper)
Public spending efficiency in the OECD (blog + paper)