Sweden has been in a recession for the past year. The recession will have a more pronounced impact on the labour market this year, with unemployment peaking at 8.4 percent.
Inflation has dropped rapidly recently, and the decline continues throughout 2024. Measured by CPIF, inflation reaches 1.2 percent by the end of the year. Therefore, the Riksbank initiates a series of interest rate cuts in June. Economic recovery begins at the end of the year, but it will not be until 2026 that the recession is over.
Consumption will be a key driver in the recovery. Lower interest rates and rising real wages will increase households' consumption growth from the end of this year. At the same time, defence spending among other things will result in significantly faster central government consumption growth than usual, both this year and next.
The National Institute of Economic Research estimates that the budget space for 2025–2028 amounts to approximately SEK 130 billion, of which approximately SEK 40 billion is expected to be utilized in 2025.
