Sweden's economic growth has been accelerating gradually since 2012, expanding at a rate of 3.6 % in 2015. Growth was amongst the highest in the EU and is forecast to remain robust in the coming years according to the Commission's 2016 winter forecast. Steadily increasing household consumption, solid investment growth and increasing government consumption are expected to support strong growth in the coming years.
While domestic demand has been the main engine of economic growth during the last years, Sweden’s export sector has been struggling. Nevertheless, as Swedish import growth slowed down at the same time, the current account surplus remained high at around 6 % of GDP compared with its peak of 9 % in 2008. As a result of sluggish trade performance, the export-oriented industrial sectors have been rather weak, while domestically oriented service sectors have been growing at a strong pace. A gradual recovery in Sweden's main trading partners and a relatively weak krona has been positively impacting Swedish export performance since 2015. This is projected to improve the outlook for export-oriented industrial production and manufacturing investment.
Sweden is experiencing macroeconomic imbalances. High and increasing household debt associated with high and growing house prices in a context of positive credit flows pose risks of disorderly correction with implications for the real economy and the banking sector. No house prices correction has taken place and the current drivers of the growth of house prices will probably remain in place in the near term. Policy measures have been taken in the macroprudential domain, which may however remain insufficient. Overall, policy gaps remain in the area of housing-related taxation, the amortisation of mortgages, the functioning of housing supply and the rental market.
Read a complete analysis of Sweden's economy in the country report 2016 [2 MB]
2015 recommendations in brief
The Commission has made one country-specific recommendation to Sweden to help it improve its economic performance. It is in the area of: housing market.