The International Monetary Fund (IMF) has released a concluding statement following its 2025 Article IV mission to Sweden. The statement highlights the country's economic recovery after a contraction in 2023, with growth expected to continue into 2025. Inflation has been controlled, but uncertainties remain high due to potential risks such as geoeconomic fragmentation and trade uncertainty.
The IMF notes that Sweden's macroeconomic policy mix is appropriate given the subdued levels of private domestic demand and a negative output gap. Monetary policy has eased to a neutral stance, while fiscal policy is projected to be moderately expansionary. The authorities are advised to be ready to use available policy space if downside risks materialize.
Sweden's economy remains strong despite challenges from global structural shifts and an aging population. Real GDP growth is estimated at 0.6 percent for 2024, with expectations of rising to 1.5 percent in 2025. Headline inflation fell significantly in December 2024 and is expected to stabilize around the target by 2026.
Monetary policy should remain agile amidst uncertainties, with the Riksbank's scenario analysis being an important tool for managing expectations. Recent amendments to the Riksbank Act aim to strengthen its balance sheet and preserve operational independence.
Systemic financial risks have subsided but remain elevated, particularly concerning household debt levels and corporate balance sheets outside the Commercial Real Estate sector. Macroprudential policies are deemed appropriate under current conditions.
Fiscal policies outlined in the 2025 budget are seen as suitable given the large negative output gap, with plans for consolidation continuing until a new balanced budget rule takes effect in 2027.
Efforts to enhance productivity and medium-term growth include simplifying regulations, improving housing markets, raising educational outcomes, maintaining infrastructure, and deepening research and development models.
The IMF acknowledges Sweden's ambitious climate targets but suggests additional measures may be needed to meet interim goals by 2030.
The delegation thanks Swedish authorities for their hospitality during discussions.