Swedish Economy Report June 2024

There was strong GDP growth in Sweden in the first quarter, but this is expected to have been temporary. Household consumption will remain weak in the near term but pick up clearly in the fourth quarter. This will help the economy bottom out this year, but it will continue to operate below capacity next year.

Unemployment is continuing to climb and will peak at 8.5 per cent. Inflation has fallen back rapidly and is expected to be below the 2 per cent target in the second half of this year and next year. The Riksbank will therefore continue to lower its policy rate. We assume that the policy rate will be brought down to 3.0 per cent at the end of 2024 and 2.25 per cent in May 2025. We estimate fiscal space of around SEK 120 billion for 2025-2028, of which around SEK 40 billion will be used in 2025.