Sweden: Economic outline
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Despite Sweden's exposure to global trade dynamics, Covid-19 has had a rather limited impact on its economy compared with most other European countries. In 2021, the continued rebound of consumption and investment contributed to an estimated growth of 4% (with the economy returning to its pre-pandemic level by the third quarter of the year). GDP growth is projected to reach 3.4% in 2022, before easing to 2.8% as the post-pandemic catch-up dissipates, with private consumption as the main growth driver (IMF).
Sweden is among rare advanced economies to show both a current account surplus and low public debt in Europe. Monetary and fiscal policies have been supportive since the outbreak of the pandemic, hence the government budget turned negative (-2.4% of GDP in 2021). The 2022 budget increases spending by SEK 74 billion (1.5% of GDP), and includes tax cuts for low-income earners and grants to municipalities to fight the pandemic. A rise in revenues and increased GDP will balance these expenses so that the IMF forecasts the deficit to gradually decrease to -0.7% this year and -0.2% in 2023 (grants from the EU Recovery and Resilience Facility should total around 0.2% of GDP in 2022 and 2023). The country’s debt-to-GDP ratio, although still low, reached 39.6% in 2021, from a pre-pandemic level of 34.9%, and is expected to gradually decrease over the forecast horizon (39.9% and 39% in 2022 and 2023, respectively). Driven largely by higher energy costs, inflation stood at 2% in 2021 but is projected to fall below Riksbank’s 2% target this year (1.6%).
Job creation was impacted by Covid-19 as the services industry slowed activity even when Sweden opted against nationwide lockdowns. The government's compensation schemes limited further unemployment, which was estimated at 8.9% in 2021 by the IMF, while wages, which are largely centrally negotiated, have increased only slightly faster than before the pandemic. The rate is projected to decrease to 7.9% this year and 7.7% in 2023. Overall, Swedish citizens enjoy a high per capita GDP of USD 55,566 (PPP – 2021), 18.5% higher than the EU’s average (USD 46,888), and the European Anti-Poverty Network (EAPN) estimates that only 2% of Sweden’s population lives in serious material poverty conditions.
Main Indicators | 2019 | 2020 | 2021 (e) | 2022 (e) | 2023 (e) |
GDP (billions USD) | 533.88e | 541.06e | 622.37 | 660.92 | 711.24 |
GDP (Constant Prices, Annual % Change) | 2.0e | -2.8e | 4.0 | 3.4 | 2.8 |
GDP per Capita (USD) | 51,694e | 52,129e | 58,639 | 61,681 | 65,770 |
General Government Balance (in % of GDP) | -0.4e | -2.6e | -2.4 | -0.7 | -0.2 |
General Government Gross Debt (in % of GDP) | 34.9e | 37.3e | 39.6 | 39.9 | 39.0 |
Inflation Rate (%) | 1.7 | 0.7e | 2.7 | 4.8 | 2.2 |
Unemployment Rate (% of the Labour Force) | 6.8 | 8.3e | 8.9 | 7.9 | 7.7 |
Current Account (billions USD) | 29.16 | 30.90e | 29.85 | 28.48 | 26.87 |
Current Account (in % of GDP) | 5.5 | 5.7e | 4.8 | 4.3 | 3.8 |
Source: IMF – World Economic Outlook Database, 2016
Note: (e) Estimated Data
Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
Swedish Krona (SEK) - Average Annual Exchange Rate For 1 GBP | 11.56 | 11.00 | 11.60 | 11.88 | 11.81 |
Source: World Bank, 2015
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Latest Update: June 2022