While Sweden is a country with low inequality, the COVID-19 crisis is exacerbating difficulties for some and risks scarring youth working prospects. Inequality in educational outcomes risks widening further, as students from disadvantaged social backgrounds may face greater difficulties to adapt to distance learning. These are top priorities for a more resilient and equitable recovery.
©Shutterstock/Anton PetrusRead full country note
2021 Structural Reform Priorities
The Swedish economy is gradually recovering from the COVID-19 crisis. Overall, GDP is projected to expand by 3.3% in both 2021 and 2022. Nevertheless, high unemployment and ongoing distancing will limit the pick-up in household consumption. Low capacity utilisation and uncertainties hold back business investment. Exports will gradually pick up as the global economy recovers. Unemployment will decrease slowly despite the economic recovery, as increases in working time from low levels will precede new recruitments.
Monetary policy will remain accommodative to facilitate credit and provide sufficient liquidity to firms. The government is implementing a sizeable fiscal package to support the economy and employment as well as to tackle structural issues like green transition and regional inequality. However, additional measures may be needed to support young, low-skilled and foreign-born unemployed, as well as remote regions.
Sweden is a strong knowledge-based economy, well integrated in global value chains, which ensures high standards of living, well-being, income and gender equality, as well as a high environmental quality to its inhabitants. Growth has been broad-based over the past five years, with consumption, investment and exports all contributing significantly. Meanwhile, strong domestic demand has pushed up imports.