The International Monetary Fund (IMF) Executive Board has concluded the 2025 Article IV consultation with Sweden, reporting signs of economic recovery following the nation's contraction in 2023. Sweden's economic growth, which began rebounding in 2024 with a 1 percent increase, is projected to reach 1.9 percent in 2025 and further rise to 2.2 percent in 2026. These positive trends are supported by effective policy frameworks, although potential threats from geoeconomic challenges and trade uncertainties remain.
Inflation has been controlled and is expected to stay near the 2 percent target. Despite strong financial buffers and a robust system, economic vulnerabilities are still present. IMF directors noted, "Monetary policy has reached a neutral stance while fiscal policy is projected to be moderately expansionary amid subdued levels of private domestic demand and a still-negative output gap."
The IMF recognized the strengths of Sweden's macroeconomic foundations, citing "solid policy frameworks, a well-functioning financial system, robust fiscal accounts, large external buffers," among other factors, as contributing advantages.
During their assessment, IMF directors praised Sweden's resilience and recovery. They stated, "Directors welcomed Sweden’s economic recovery and resilience, underpinned by solid fundamentals." They accepted the fiscal plans in the 2025 budget and suggested that the country's ample fiscal space could be leveraged for targeted policy support if risks materialize.
In terms of monetary policy, the directors commended Riksbank, the Swedish central bank, for its strategic responses to price pressures. "Directors commended Riksbank’s effective and clearly communicated monetary policy response with price pressures broadly under control," the statement noted.
Sweden's financial system was identified as resilient. However, IMF directors advised, "They encouraged the authorities to remain vigilant and further strengthen their regulatory and supervisory frameworks, given elevated systemic risks from high household debt and large bank exposures to commercial real estate."
The IMF emphasized the importance of labor productivity, urging reforms in regulations and education, and greater efforts towards Sweden's climate agenda.
As part of their economic outlook, the IMF directors have highlighted areas, such as housing affordability, and suggested reforms in housing and tax policy to address these challenges. They also encouraged Sweden to deepen research and development to remain competitive.
The full staff report detailing these consultations will be published on the official IMF website dedicated to Sweden's reports.