The Dive

The Economy of Sweden - Industry & Market Trends in 2023

Last Updated: May 2, 2023


What is The Overall Outlook in Sweden?

For the last 50 years, Sweden has been a prosperous country. Although economic growth stagnated during the last two decades of the 20th century, the past decade has seen a phenomenal surge in growth, thanks to significant gains in productivity that have placed Sweden well above the average for advanced EU nations. Furthermore, the government’s persistent efforts to expand the industry’s research and development investment, as well as Sweden’s increased strategic presence in the EU, have further brightened the country’s outlook.

Sweden is likely face a recession in this year (2023). However, growth is projected to quickly pick up its face after 2023 and grow at an average rate of 2%. Pressured put forth by the Russian invasion to the Ukraine has put further pressure on the Swedish economy.

To counter the rising inflation, the Riksbank raised its policy rate by 50 basis points to 3% at its February meeting, the highest rate in 15 years. Some low margins industry may suffer throughout the year. Some economists predict interest rate will be raised to 3.5% in the spring.

From a long term’s perspective, the following factors will have the greatest impact to the economy of Sweden.

Exceptional welfare system, and an aging society: Sweden’s working-age population is projected to rise in the near future, mainly due to net immigration. However, the proportion of the working-age population in the total population is expected to gradually decrease over the long term due to the aging population. One of the primary policy challenges in the long term is financing increasing public expenditure on healthcare.

Raising the employment rate to achieve a growing tax base and expand the effective labor supply will be difficult since Sweden already has one of the highest labor force participation rates in the OECD. However, there is room for improvement in the participation rates of specific groups, such as young people and immigrants, which could increase overall labor utilization rates. While the large-scale immigration from the Middle East in 2015-16 could potentially boost Sweden’s demographic outlook, integrating a significant proportion of the newcomers into productive sectors of the economy remains a significant challenge. Additionally, the pace of migration in 2015 raised immigration as a top concern among voters, further complicating policymaking in this area.

Liberal Sweden put to the test as protectionism rise: Sweden’s economy heavily relies on trade and would benefit from continued gradual liberalization of EU trade with other parts of the world. However, since multilateral trade liberalization talks have stalled, any progress is more likely to come through bilateral agreements at the EU level. Further liberalization of trade could help gradually boost demand for Swedish services, but Sweden’s reliance on exports also makes it vulnerable to the global business cycle and potential reshoring of supply chains.

Despite the slowdown of emerging-market growth in recent years, Sweden is likely to continue focusing on high-tech, high-skills industries and services, and can still benefit from the rising wealth in emerging economies, although it may lose some traditional export companies due to competition from lower-cost emerging markets. Although the EU’s long-term growth will be lackluster due to adverse demographic trends, constrained public finances, and slow implementation of structural reforms, liberalization of trade in services within the EU should continue slowly. As a result, Sweden’s largest export market, although large and wealthy, will remain sluggish.

Table of Contents
Real GDP Growth(%)|Data After 2023 is forecasted by IMF
GDP Per Capita (Current $)|Data After 2023 is forecasted by IMF

Economic Structure

Sweden - Economic Structure & Forecast

GDP Data is updated in January, 2023. Figures below represent GDP contribution with the expenditure approach by segment. Data is sourced from World Bank, IMF, and local government and refactored by our team. Forecasted data is from EIU.

Private Consumption
Government Expenditure
Capital Formation
Net Export

Economy Outlook

Economic Snapshot of Sweden

Most estimates for real GDP growth in Sweden for 2022 is 2.4-2.9%, lower than the previous estimates that stand between 3.1% to 3.5% due to a decline in consumption and investment, resulting in two small contractions in the fourth quarter of 2022 and the first quarter of 2023. Sweden’s export-oriented economy, with about 50% of exports going to other EU countries, including 11% to Germany, will be affected if those countries go into recession. We expect real GDP growth in Sweden to go into negative in 2023 due to uncertainty about both domestic and external demand, higher borrowing costs, and the energy crisis. The war is also negatively impacting Sweden’s economy through the trade and inflation channels, with consumer price growth surpassing wage growth in 2022, reducing consumers’ purchasing power and spending. Other risks include a faster than expected rise in interest rates, potential defaults due to a sharp decline in residential real estate prices, high labor costs, youth unemployment, and unfavorable demographics.

Unemployment Rate(%)|Forecasted data for after 2023
Inflation Rate(%)|Forecasted data for after 2023

Industry Structure

Sweden - Industry Breakdown & Forecast

GDP Data is updated in January, 2023. Figures below represent GDP contribution with the expenditure approach by segment. Data is sourced from World Bank, IMF, and local government and refactored by our team. Forecasted data is from EIU.

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Demographic Outlook

Demographic Outlook in Sweden

Racial Profile

Swedish 80.3%, Syrian 1.9%, Iraqi 1.4%, Finnish 1.4%, other 15% (2020 est. by CIA)

Languages Used

Swedish (official)

Religions Practiced

Church of Sweden (Lutheran) 57.6%, other (includes Roman Catholic, Orthodox, Baptist, Muslim, Jewish, and Buddhist) 8.9%, none or unspecified 33.5% (2019 est. by CIA)

Population Structure

Sweden - Population Pyramid

Political Outlook

Political Outlook & Policy Trends in Sweden

Sweden has been a constitutional monarchy since 1809 and introduced a new written constitution in the 1970s. The country has one of the world’s most advanced social-welfare systems, based mainly on legislation from the early post-war period. Sweden joined the EU in 1995 but did not adopt the single currency after rejecting it in a 2003 referendum.

The Riksdag, a single-chamber parliament, consists of 349 seats, of which 310 are allocated to the 29 constituencies and 39 are adjustment seats distributed at the national level to achieve a nationally proportional result. A party must gain 4% of the national vote or 12% of a constituency vote to enter parliament, and Sweden’s political system is characterized by a multiparty system, with coalitions and minority governments being the norm.

The new government’s focus will be on defense spending and energy subsidies to help alleviate the energy crisis. While there is a general consensus on Sweden’s successful economic and social model, the major political differences revolve around labor-market policies, such as unemployment benefits, marginal tax levels, the future of nuclear energy, and the extent of privatization of public services and state-owned companies. Sweden’s previously liberal immigration policies have been tightened since 2015 due to rising public sentiment. The Riksbank has abandoned its negative-interest-rate policy due to concerns about financial stability, and addressing high household debt remains a priority.

Sweden’s government will prioritize its presidency of the Council of the European Union from January 1st to June 30th 2023 over domestic issues. The government has identified four areas of policy to focus on during its tenure: the fight against serious crime, preparing for another recession, achieving climate goals, and leading Sweden into NATO. The government also plans to prioritize employment creation by reducing social-security contributions to incentivize job creation. Due to pressure from the SD, the government will tighten its policy stance on immigration, stating that high levels of immigration have caused Sweden’s largest economic and social problems.

Sweden’s plan for spending the EU recovery fund proceeds will focus on the green transition, with 44% of the total allocated to achieving a more environmentally friendly economy. This exceeds the minimum requirement of 37% under the regulations of the Recovery and Resilience Facility. The funds will be invested in research and development to decarbonize emissions-intensive industrial sectors, develop electric-car charging infrastructure, and other projects aimed at reducing greenhouse gas emissions. Additionally, 20.5% of the allocation will be directed toward the digital transition, including improving access to high-speed internet connections in sparsely populated areas and investing in higher vocational education and universities to improve digital skills. The remaining funds will be used to increase the supply of rental dwellings to ease the housing shortage.

Note: No Left–Right Categorization
Current Account Balance (% of GDP)|Forecasted data for after 2023
Government Debt (% of GDP)|Forecasted data for after 2023

Foreign Policy

Trade & Foreign Investment In Sweden

Export (Million Dollars | Nominal)
Export - Percentage of World (‱)
Foreign Direct Investment (Million Dollars | Nominal)
FDI - Percentage of World (‱)

Consumer Outlook

Sweden - Consumer & Market Outlook

We work with 3rd party data offices and our experts network to deliver the most comprehensive retail & consumer behavior landscape there is.

E-Commerce Development, Penetration, Trends & Outlook in Sweden

Social Media Development, User Demographics, Platforms, and Trends in Sweden

  • Economic Data:OECD, World Bank, IMF、Government Statistics Bureau
  • Currency Exchange:Based on IMF data in 2023/1
  • GDP Growth Projection:OECD、IMF, OECD, EIU、Government Bureau
  • Demographics:UN Population Database
  • Race, Culture, and Languages:CIA Factbook
  • Unemployment Rate Projection:ILO, UNECE
  • Trade:UN Comtrade, UNCTD
  • ICT Infrastructure:ITU
  • Data Calculation &
  • Analysis:OOSGA Analytics
Author: Economic Team, FR Team

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