Politics and Economy

Sweden’s economy grows faster than expected: Government raises 2026 forecast to 3.0 per cent

Sweden's caretaker government now expects economic growth of 3.0 per cent in 2026, up from 2.5 per cent. Unemployment is forecast to fall to 7.7 per cent by 2027 – while inflation and interest rate expectations are rising.

October 11, 2026

Sweden’s economy is recovering faster than previously assumed. The caretaker government has raised its growth forecast for the current year from 2.5 to 3.0 per cent. Finance Minister Elisabeth Svantesson (Moderates) presented the new figures in Stockholm on Thursday, 8 October 2026. For 2027, by contrast, expectations are somewhat more cautious than in August.

The new figures at a glance

According to the Ministry of Finance’s forecast, the key indicators are developing as follows:

Economic growth 2026: 3.0 per cent (August forecast: 2.5 per cent)
Economic growth 2027: 2.3 per cent (previously: 2.5 per cent)
Unemployment 2026: 8.5 per cent
Unemployment 2027: 7.7 per cent
Fiscal room for reforms in the coming parliamentary term: unchanged at 50 billion kronor

The ministry attributes the upgrade to the fact that both household confidence and household consumption rose in the first half of 2026. Businesses and the public sector also invested more. According to the ministry, the economic downturn should be overcome next year.

Svantesson: Economy is “running like a train”

The finance minister painted a decidedly positive picture. The Swedish economy is “running like a train”, she said at the press conference, according to the TT news agency. The next government will inherit a “very nicely laid table”. In her account, Sweden currently stands out from other EU countries.

The remarks come at a politically uncertain time: since the Riksdag election of 13 September, the outgoing government has only been in office in a caretaker capacity, and government formation has not yet been completed. Who will allocate the 50 billion kronor mentioned, and for what, therefore remains open.

Labour market recovering only slowly

Developments on the labour market are less dynamic. The Ministry of Finance itself speaks of a cautious recovery. Unemployment is not expected to fall noticeably until the second half of 2026 and over the course of 2027. At 8.5 per cent, the rate this year remains at a high level for Sweden. For anyone considering looking for a job in Sweden, the situation therefore continues to vary by sector.

Risks: Energy prices, inflation and rising interest rates

The government points to great uncertainty in the wider environment. It names geopolitical tensions in the Middle East and their consequences for energy markets as the most important risks. According to TT, Svantesson also mentioned the war in Ukraine, the effects of artificial intelligence on the economy and rising interest rates, which could dampen domestic demand.

The ministry describes inflation as low despite high energy prices, explaining this by low core inflation and temporary tax cuts; it says inflation will approach the Riksbank’s 2 per cent target. Just the day before the forecast, the statistics agency SCB had published preliminary figures: the CPIF rate, which is decisive for monetary policy, rose to 1.5 per cent in September, after 0.7 per cent in August. Excluding energy, it remained at 0.5 per cent. According to The Local, bank economists therefore expect the key interest rate, currently 1.75 per cent, to be raised as early as November.

What this means for people in Sweden

For households in Sweden, the picture is mixed. Growth and falling unemployment point to some relief, but higher interest rates would hit property owners with variable-rate loans in particular, which are widespread in Sweden. How much of the forecast fiscal room actually goes into tax cuts or higher spending will only be decided by the future government in its budget.