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Sweden’s economy is on track to emerge from nearly three years of weak growth as fiscal and monetary stimulus revive household spending in 2026, according to government forecasts. The finance ministry expects gross domestic product to expand by 3% next year, almost double this year’s pace and the fastest growth rate in five years.
Household purchasing power returns
Finance Minister Elisabeth Svantesson said a recovery has already begun, with households set to benefit from stronger purchasing power next year. Tax cuts on earned income and food are expected to support consumption, which has been subdued in recent years. The government sees domestic demand as the primary engine of the economic rebound.
Looser fiscal stance supports recovery
The 2026 budget projects a deficit of 2.4% of GDP, up from 1.4% this year, reflecting increased defense spending alongside measures aimed at boosting household incomes. Despite the wider deficit, Sweden’s public debt remains low by European standards and is forecast to rise only marginally.
Political stakes ahead of elections
The improved outlook offers a potential boost for Sweden’s center-right minority government as it approaches elections next autumn. Prime Minister Ulf Kristersson’s coalition has lagged behind the opposition in opinion polls amid criticism over sluggish growth and elevated unemployment, making the projected rebound economically and politically significant.
Growth moderates after 2026 peak
Beyond next year, the finance ministry expects growth to slow to 2.3% in 2027 and 1.2% in 2028, suggesting that part of the rebound reflects cyclical support rather than a permanent acceleration. Maintaining momentum will depend on whether stronger consumption translates into higher investment and productivity gains.
As reported by International Investment experts, Sweden’s outlook stands out in Europe thanks to its fiscal flexibility and low public debt. The key challenge after 2026 will be converting stimulus-driven growth into a more durable expansion based on investment, innovation, and competitiveness.